Shared prosperity constitutes both income growth and inequality reduction

The vision of the World Bank is to end extreme poverty and boost shared prosperity on a livable planet. The number of people who live in extreme poverty — i.e., less than $3 a day — is an important indicator to track the first part of this vision. To capture shared prosperity, the second part, requires a measure that includes not just the extreme poor — who constitute 10 percent of the global population today — but everyone. In addition, the measure captures both higher living standards through income growth and how it is distributed. The Prosperity Gap, outlined in detail in the recently released Atlas of Global Development, captures prosperity within countries and around the world. This blog first presents a measures that looks just at inequality, then a measure that mostly focuses on income growth, and finally the Prosperity Gap.
 

Thinking about inequality

A measure that captures prosperity should account for both the level of welfare and level of inequality. A measure that captures inequality, such as the Gini index, is an example of a measure of inclusivity. The World Bank reports the number of economies with high levels of inequality, defined as those with a Gini index greater than 40. Based on this, the number of economies with high inequality has declined by more than a third in the past three decades.

The Gini index captures how welfare is shared within each economy. However, it says nothing about the level of welfare. Two countries may be ranked equally using the Gini index, but one country could be much richer than the other. As such, most would argue that shared prosperity is greater in the richer country.

Another well-used measure to track shared progress focuses on the income growth of the poorest 40 percent. By comparing this with the growth in average income indicates how growth is shared within an economy. When growth is higher for the poorest, prosperity is increasingly being shared. Like the Gini index, this measure does not capture the level of income. Additionally, it does not account for inequality within the poorest 40 percent. In fact, the bottom 40 measure gives more importance to the richer individuals within the bottom 40 percent than the poorer individuals that we really care about.
 

Going beyond inequality to capture shared prosperity

A more comprehensive measure for shared prosperity would capture both the income level and how it is distributed. Arguably, a progressive measure of shared prosperity would also put greater emphasis on the poorest individual in society. The Prosperity Gap, a measure developed and used by the World Bank to track shared prosperity, does just that. The Prosperity Gap is the average factor by which individuals’ incomes must be multiplied to reach a global prosperity standard, currently set at $28 per person per day. As such, it both accounts for the level of income in an economy, as well as its distribution.

Consider an individual earning $14 a day and another earning $7 a day. To reach the $28 a day standard, the first individual must doubletheir income while the second must increase their income fourfold. Consequently, the Prosperity Gap is two for the first individual and four for the second. In other words, this measure gives the person with half the income double the importance.

This recent chapter of the Atlas of Global Development provides an interactive story of how the Prosperity Gap works and why it is well suited to capture progress towards a world where prosperity is shared.

The Global Prosperity Gap has halved since the 1990s

The world has moved impressively towards reducing the gap in prosperity in recent decades. Since the 1990s, the Global Prosperity Gap has halved from close to 13 in 1981 to 4.5 in 2026. In other words, incomes on average needed to increase almost 13 times in 1981 but “only” 4.5 times in 2026 for everyone in the world to reach the prosperity threshold of $28 per day.

There is much work to be done still

Much is still to be done to ensure prosperity is indeed shared by all, especially in an environment of increasing conflict, costs, and uncertainty. The Prosperity Gap is a meaningful tool that ensures timely, relevant and detailed information on shared progress or lack thereof.

To learn more about the Prosperity Gap and how the World Bank monitors progress towards shared prosperity, have a look at this interactive chapter of the 2026 Global Atlas.

Source : World Bank