ABSTRACT
Poverty and economic inequality are, in any context, cause for deep social and ethical concern. Estimating trends in the world income distribution necessarily involves methodological, statistical, and conceptual problems which prevent firm, precise conclusions. This chapter attempts to provide some feel for the major sources of imprecision. It provides decomposition of changes in world inequality over subperiods distinguished between 1950 and 1977, based on the elasticities of decomposable inequality measures like the Theil coefficient and the mean logarithm deviation (MLD). World inequality reflects both intracountry and intercountry income differences. The sensitivity of the world Theil coefficient to income and distribution data for individual countries is very low, except for some large countries like India, China, and the United States. Taking the full period 1950-86, there was an unambiguous worsening in distributions of income and consumption in the nonsocialist countries, a significant decrease in the share of people in poverty and significant increase in the absolute number of people in poverty.
