developed a research program on the economics of poverty in developing countries that became highly influential, both within the Bank and in scholarly circles.<sup>20</sup> Poverty is not inequality, however. Indeed, the Bank generally continued to be rather careful to speak of the former while avoiding mentioning the latter, unless strictly necessary. But under any rigorous analysis of poverty, sustaining this dichotomy is hard to do. Changes in poverty are mathematically determined by changes in average incomes and changes in the Lorenz Curve, which anchors all meaningful (relative) measures of inequality. (See, e.g., Ferreira and Ravallion, 2009.) Once one starts to be interested in poverty, inequality becomes increasingly hard to avoid. Indeed, as Figure 1 illustrates, the relative frequency of the word inequality in World Bank documents – which had spiked in the early 1970s and then flatlined near zero throughout the 1980s – revived precisely in the lead-up to the WDR 1990.

Aside from the internal dynamics leading to a resumption of interest in poverty, three other factors combined to make the 1990s the decade when inequality gradually became an issue that both the Bank and, soon after, the Fund were prepared to discuss and study seriously. These were, first, the growing availability of household survey data, which was then indispensable for any empirical assessment, measurement and analysis of inequality in incomes or consumption expenditures. Whereas Ahluwalia et al. (1979) had disaggregated household consumption or income data for 25 countries when they first tried to estimate global poverty, by the end of the 1990s, the estimates from Chen and Ravallion (2001) were based on 297 national surveys from 88 countries.

Second, the political authorizing environment changed once again, away from the starkly rightwing Reagan / Bush period. The fall of the Berlin Wall in 1989 and the collapse of the Soviet Union in 1991 marked the end of the Cold War.<sup>21</sup> Bill Clinton replaced George H.W. Bush as US president in January 1993. In 1995, Clinton backed the appointment of Jim Wolfensohn as World Bank President. While Wolfensohn came to the Bank from Wall Street and was hardly a socialist, he was certainly more open than some of his predecessors to confronting difficult issues, such as corruption and inequality. His first appointment as Chief Economist (replacing Michael Bruno), was Joseph Stiglitz, in 1997.<sup>22</sup> Stiglitz had not yet been awarded his Nobel Prize and was better known for his pathbreaking work on information economics than for his important early work on inequality (such as his previously mentioned 1969 article in _Econometrica_ ). Nonetheless, he was the same man who would go on to publish _The Price of Inequality_ in 2012, and _The Great Divide_ in 2015: two of the first “blockbuster” books on inequality by leading economists in the 2010s, to which we will return below.

Third, in academia too, the pendulum was gradually swinging back towards a concern with distribution and inequality. Interestingly, whereas the advances that had drawn attention to these issues in the 1970s had been mostly in normative analysis and in measurement, in the 1990s it was a literature in macroeconomic theory that had an early and profound impact. This was a set of papers investigating whether and how, in the presence of capital market imperfections, wealth inequality might reduce efficiency and economic growth. It included seminal work by Galor and Zeira (1993), Banerjee and

> 20 There was also some internal soul-searching about the Washington Consensus more broadly, motivated by the contemporary success of a number of East Asian countries, which followed a rather different model (World Bank, 1993).

> 21In 2022 one is tempted to write “the end of that installment of the Cold War”.

> 22 Also in 1997, Tony Blair became prime-minister in the UK, and the Clinton-Blair years had truly replaced the Thatcher- Reagan ones.

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