What's Behind the Inequality We Measure? An Investigation Using Latin American Data

The use of income distribution indicators in the economics literature has increased considerably in recent years. Using household surveys from 18 Latin American and Caribbean countries, this article seeks to explore what is behind the numbers, and what information they convey. We find that the way in which countries rank according to inequality measured in a conventional way is, to a large extent, an illusion created by differences in characteristics of the data and on the particular ways in which the data are treated. Our main conclusion is that there is an important story behind each number. This story influences our judgment about how unequal countries are, but it is seldom told or understood. Perhaps other statistics commonly used in economics also have their own interesting story, and it might be worth trying to find out what it is.