One reason to pay attention to the distribution of income is its relationship to poverty. For any given average level of income, if income is distributed more unequally, more people will live in poverty. An example makes this point clear. In the year 2005, average income per capita in India ($2,557) was 21% larger than average income per capita in Pakistan ($2,112). But the fraction of the population living on an income of less than $1.25  per day was 41.6% in India, compared with only 22.5% in Pakistan.1 The reason for the difference was the distribution of income. Pakistan has a more equal distribution of income than does India.