Measuring Inequality from Above

• Authors: Marta Reynal-Querol and José García-Montalvo.
• BSE Working Paper: 1252 | May 21
• Keywords: inequality , development , inequality between and within decomposition , nighttime light
• JEL codes: O10
• inequality
• development
• inequality between and within decomposition
• nighttime light

Recent research has shown the usefulness of nighttime light (NTL) data as a proxy for growth and economic activity. This paper explores the potential of using luminosity at night, recorded by satellite imagery, to construct measures of inequality. We develop a new methodology to construct a Gini index for each country using the nighttime light per capita over millions of small pixels. To assess the usefulness of our procedure, we check the correlation of our measure with the common factor extracted from the analysis of several Gini indices calculated using traditional data sources. Finally, we show two specific applications of our methodology: the calculation of within and between inequality across regions and ethnic groups.