Individual-level inequality

Standard household-level data hide substantial heterogeneity in how consumption money, and time are allocated within households. This motivates the need for measuring welfare at the individual level and a structural approach on how household data can e used to capture these differences. After documenting what can be learned from direct survey evidence, we present the collective approach as an attractive framework for modeling intra-household decision-making with preference heterogeneity, public consumption, and home production. We then survey three identification strategies that recover individual preferences and resource shares from widely available datasets: differential, revealed preference, and preference-similarity methods. Applying these tools reveals that a sizable share of overall inequality originates within households and that individual poverty rates often diverge sharply from household-level measures. Overall, our review demonstrates that measuring welfare at the individual level fundamentally reshapes our understanding of inequality, and offers practical guidance for incorporating intra-household heterogeneity into empirical welfare evaluations.