Individual-Level Inequality

Laurens Cherchye, Bram De Rock and Frederic Vermeulen

No 2026-10, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: We review recent advances in the measurement of individual welfare, inequality,and poverty. We show that standard household-level data hide substantial heterogeneity in how time, money, and both private and public goods are allocated withinhouseholds. After documenting what can be learned from direct survey evidence, wepresent the collective approach as a coherent framework for modeling intra-householddecision-making with preference heterogeneity, public consumption, and home production. We then survey three identification strategies that recover individual preferencesand resource shares from widely available datasets: differential, revealed preference,and preference-similarity methods. Applying these tools reveals that a sizable share ofoverall inequality originates within households and that individual poverty rates oftendiverge sharply from household-level measures. Overall, our review demonstrates thatmeasuring welfare at the individual level fundamentally reshapes our understanding ofinequality, and offers practical guidance for incorporating intra-household heterogeneity into empirical welfare evaluations

Keywords: intra-household inequality; collective household consumption; sharing rule; individual welfare measurement (search for similar items in EconPapers)
JEL-codes: D13 D31 I32 J22 (search for similar items in EconPapers)
Pages: 42 p.
Date: 2026-03-01
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