How Serious is the Neglect of Intra‐Household Inequality in Multidimensional Poverty and Inequality Analyses? Evidence from India

Monetary poverty measures as well as most existing multidimensional poverty indices (MPI) assume equal distribution within the household and thus are likely to yield a biased assessment of individual poverty, and poverty by age or gender. We show that the direction of the bias of such household‐based assessments in measuring poverty or inequality among individuals depends on how these measures use individual data to determine the poverty status of households. We use data from the 2012 Indian Human Development Survey and compare a standard household‐based MPI to an individual‐level MPI. The poverty rate among women is 14 percent points higher than that of men in our individual MPI measure but almost the same when using the household‐based measure. 22 percent of males and 27 percent of females are misclassified as poor or non‐poor using the household‐based measure. We also show that intra‐household inequality is 30 percent of total inequality.