Exploring the Dynamics of Inter-Household Consumption Inequality in Ghana

Abstract

ABSTRACT The lack of distinctive constructs for poverty and inequality often makes it difficult, if not impossible, to assess both of these economic welfare outcomes clearly and independently. In this article, we propose the use of household expenditure deviations as a proxy for inter-household consumption inequality. By means of this novel construct, we are able to model the correlates of poverty and inequality separately, using a panel dataset for Ghana. We find four different cases of correlations for household poverty and inequality. While some factors are associated with both increasing poverty and inequality, such as male headship and belonging to traditionalist religions, other factors are associated with decreasing poverty and inequality, such as higher education, employment, and the provision of social safety nets. Perhaps more interestingly, some factors are associated with increasing (decreasing) poverty but decreasing (increasing) inequality. These findings allow greater policy concentration on not just poverty, as has been the case in many developing countries, but also on inequality. We conclude that it would be important to design more nuanced interventions, therefore, to ensure that both welfare outcomes—poverty and inequality—are satisfactorily and simultaneously achieved.