The relationship between poverty and inequality: concepts and measurement

This paper defines and maps the variety of different concepts and measures of poverty and inequality that have been developed and used in research. These reflect differing views of what constitutes a minimum acceptable quality of life and how the disparity between the least and most well-off in society should be defined. Since the analytical conclusions of poverty and inequality research can depend on the concepts and measures chosen, it is worth laying out their underlying rationales. In this paper we discuss the concepts of poverty and inequality in broad terms; the focal variables of poverty and inequality that have been proposed in the literature, from unidimensional monetary indicators to broader multidimensional and subjective concepts; the issues in conducting comparative analyses of poverty and inequality over subgroups of individuals, households, countries and over time; and the properties of measures proposed for summarising levels of poverty and inequality over the population.