Using Nighttime Light Inequality to Understand Economic Inequality in India

Consistent data on economic inequality are unavailable over time at the subnational level in India. Existing studies have demonstrated that rising spatial inequality can lead to rising economic inequality. Since nighttime light inequality is a form of spatial inequality, we examine whether nighttime light inequality can be used as a proxy of economic inequality at the subnational level in India. We compute nighttime light inequality for 93 homogenous regions and 25 states in India for each year from 2014 to 2021 exploiting the granular availability of VIIRS nighttime light data. Corresponding economic inequality is proxied using survey-based consumption inequality. Further, we examine the incidence of crime across cities in India using nighttime light inequality as a proxy of economic inequality at the city level. Using pooled OLS estimation, random effects, and time fixed-effect estimation we find a positive association between nighttime light inequality and consumption inequality. Similarly, in line with the existing literature, we also find that a positive relationship exists between incidence of crime and nighttime light inequality across cities in India.