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Standard ways of measuring real income are known to be inconsistent withconsumer preferences. We provide preference-consistent estimates of real income,based on the income-specific price indices that are consistent with nonhomotheticpreferences. We find that existing measures, such as Geary, GEKS andGAIA, create systematic biases: the poorer is a country, the more its income isoverestimated by these measures. Consequently, international income inequalityis underestimated by the same measures

Global Income Inequality and Cost-of-Living Adjustment: The Geary-Allen World Accounts