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Global income inequality and cost-of-living adjustment : the Geary–Allen world accounts

Almås, Ingvild; Sørensen, Erik Ø.
Working paper
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SAM2012.pdf (291.2Kb)
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http://hdl.handle.net/11250/163418
Utgivelsesdato
2012-10
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  • Discussion papers (SAM) [607]
Sammendrag
Standard ways of measuring real income are known to be inconsistent with

consumer preferences. We provide preference-consistent estimates of real income,

based on the income-specific price indices that are consistent with nonhomothetic

preferences. We find that existing measures, such as Geary, GEKS and

GAIA, create systematic biases: the poorer is a country, the more its income is

overestimated by these measures. Consequently, international income inequality

is underestimated by the same measures.
Utgiver
Norwegian School of Economics, Department of Economics
Serie
Discussion paper;20/2012

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