That was the central question discussed at a recent event with international experts and practitioners, including World Bank Chief Economist Indermit Gill. His response was emphatic: “How can it not? If you look at the aspects of inequality such as opportunity, income, wealth, and power, it matters a lot. It can really hurt development if it is too high or unmanageable. But then, the real question is, what do you do about it? And is the cure often worse than the disease?”
High levels of inequality limit people’s ability to move up the socioeconomic ladder and slow progress toward broad based growth and poverty eradication. Conversely, reducing inequality can strengthen human capital, accelerate poverty reduction, and unlock inclusive development.
Recognizing this, the World Bank actively monitors inequality through its Poverty and Inequality Platform, which provides Gini index estimates for 172 countries, covering nearly 98 percent of the world’s population. The Gini index measures how income or consumption is distributed across a population, making it a valuable tool for assessing inequality. In 2024, the World Bank introduced a new global indicator as part of its Corporate Scorecard. This indicator measures the number of countries with high inequality, defined as a Gini index above 40. The latest data shows that more than one in four people live in countries with high inequality, particularly in Sub Saharan Africa and in Latin America and the Caribbean.
Measuring inequality, however, is not without challenges. Household surveys, which underpin most estimates, often miss those at the extremes of the income spectrum due to underreporting or nonresponse. Frequency of updates also varies widely, with some countries providing annual data and others much less often. Moreover, countries differ in methodology, with some relying on income data while others use consumption expenditure. Adjustments for urban and rural price differences, or changes in survey design over time, can also make comparisons difficult.
To bridge these gaps, recent efforts have combined household surveys with tax records or administrative data, but comprehensive income tax data remain scarce outside high income countries. The World Bank is therefore investing in stronger national statistical systems, supporting the use of tax and administrative data, and developing innovative methods to better capture income and wealth distribution.
As part of the 21st replenishment of the International Development Association (IDA21), the Bank has committed to helping 30 low income countries invest in household surveys to strengthen evidence based policymaking. More accurate and timely data will enable governments to design targeted policies that tackle inequality and promote inclusive growth.
The World Bank’s mission to end poverty and boost shared prosperity rests on a vision of growth that includes people across all income levels, especially those at the bottom. Understanding the drivers of inequality, investing in better data, and building stronger partnerships are essential to ensuring that growth benefits all and that no one is left behind.
