Prices and Global Inequality: New Evidence from Worldwide Scanner Data

How do prices affect inequality and living standards worldwide? To address existing biases in the measurement of prices and expenditure patterns across countries, this paper introduces a new global scanner database. This dataset provides harmonized barcode-level data on expenditures and prices for fast-moving consumer goods during the last decade in thirty four countries, which include both developing (e.g., Brazil, China, India, and South Africa) and developed countries (e.g., the United States, Russia, and most European countries) and represent 70% of world GDP and 60% of world population. We quantify the importance of several common biases stemming from substitution, product variety, and taste shocks, and how they vary with the level of economic development. We then build purchasing power parity indices using identical barcodes across countries. We show that adjustments for product variety, non-homotheticities, and taste heterogeneity are quantitatively important. Overall, these findings indicate that using micro data on prices and expenditures is crucial to accurately describe patterns of inclusive growth worldwide.