One of the most frequent critiques of the HDI is that is does not take into account inequality within countries in its three dimensions. In this paper, we apply a simply approach to compute the three components and the overall HDI for quintiles of the income distribution. This allows a comparison of the level in human development of the poor with the level of the non-poor within countries, but also across countries. This is an application of the method presented in Grimm et al. (World Development 36(12):2527–2546, 2008) to a sample of 21 low and middle income countries and 11 industrialized countries. In particular the inclusion of the industrialized countries, which were not included in the previous work, implies to deal with a number of additional challenges, which we outline in this paper. Our results show that inequality in human development within countries is high, both in developed and industrialized countries. In fact, the HDI of the lowest quintiles in industrialized countries is often below the HDI of the richest quintile in many middle income countries. We also find, however, a strong overall negative correlation between the level of human development and inequality in human development.

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Researchers seeking to perform country-comparative and trend analyses using income data have to account for the fact that income surveys differ in whether income is measured gross or net of taxes and contributions. We discuss, develop, and evaluate two`netting down procedures' for data in the LIS Database. Evaluations of these netting down procedures indicate that comparisons across gross and net datasets can be greatly improved when netting down procedures are applied. In several cases, however, substantial amounts of bias remain.JEL Codes: D3, P5, C8

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