Data from two Household Budget Surveys in 1991-1992 and 2000-2001 in Tanzania indicate that there is no change in inequality between the two surveys. In spite of this finding, and impressive macroeconomic gains, there is growing discontent throughout the country because of the belief that the change from socialist to market policies has worsened income inequality. In this chapter, the authors argue that the Gini index fails to capture some inconspicuous trends in the income distribution, particularly the problem of polarization across space. Using polarization measures based on point density estimation of alienation and identification, they analyze changes in the distribution of household income in Tanzania in the 1990s. Unlike analyses that rely on the Gini index, the authors find that polarization increased significantly between 1992 and 2001. They also find evidence of increased spatial variability across regions and lack of spatial convergence of household incomes.