Measuring inequality between countries is not as easy as it seems, said Robert Inklaar, Professor at the University of Groningen at a seminar organised jointly by the EIB Institute and the University of Luxembourg as part of “Inequality and…” series.

When using GDP per capita to measure inequality, India is 34 times poorer than the USA. However, as prices and budget shares differ across countries (food represents 29% of an Indian citizen’s budget vs 6% for an American), it is more reliable to use a purchasing power parity (PPP) index per capita by which measure India is ten times poorer than the USA.

When taking into account measurement methodology and price sampling methods across countries and applying it retroactively, Prof Inklaar found out that international income inequality based on the 2005 International Comparison Programme (ICP) had in fact been overstated.

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