Development Issues Series

Measuring poverty with a single income or expenditure measure is an imperfect way to understand the deprivations of the poor since, for example, markets for basic needs and public goods may not exist. Complementing monetary with non-monetary information provides a more complete picture of poverty.

There are many measures of inequality that, when combined, provide nuance and depth to our understanding of how income is distributed. Choosing which measure to use requires understanding the strengths and weaknesses of each, and how they can complement each other to provide a complete picture.

The understanding of inequality has evolved from the traditional outcome-oriented view, whereby income is used as a proxy for well-being. The opportunity-oriented perspective acknowledges that circumstances of birth are essential to life outcomes and that equality of opportunity requires a fair starting point for all.