![\"Is](\"https:\/\/i0.wp.com\/www.dougsbriefcase.com\/blog\/wp-content\/uploads\/2014\/06\/credit-the-politic.org_.jpg\")
<\/a>Is inequal\u00adi\u00adty bet\u00adter mea\u00adsured by what we earn or what we spend? The dif\u00adfer\u00adence is sur\u00adpris\u00ading. [Cred\u00adit: Politic.org]<\/p><\/div>Is your stan\u00addard of liv\u00ading bet\u00adter mea\u00adsured by what you earn or by what you buy?\n
The ques\u00adtion may seem an odd one, but it is crit\u00adi\u00adcal to under\u00adstand\u00ading the prob\u00adlem of ris\u00ading inequality.<\/p>\n
Most of what\u2019s been writ\u00adten on the sub\u00adject focus\u00ades on widen\u00ading income dis\u00adpar\u00adi\u00adties. Thomas Piketty\u2019s cel\u00ade\u00adbrat\u00aded work, Cap\u00adi\u00adtal in the Twen\u00adty-First Cen\u00adtu\u00adry<\/em><\/a>,<\/span> relies on a trove of income tax data from the US<\/span> and oth\u00ader pros\u00adper\u00adous coun\u00adtries to argue that income dis\u00adpar\u00adi\u00adties are ris\u00ading through\u00adout the devel\u00adoped world and reach\u00ading lev\u00adels not seen since the ear\u00adly twen\u00adti\u00adeth century.<\/p>\n In an ear\u00adli\u00ader post<\/a>,<\/span> I dis\u00adcussed sev\u00ader\u00adal crit\u00adi\u00adcisms of the study, includ\u00ading Piket\u00adty\u2019s fail\u00adure to take into account the effect of trans\u00adfer pro\u00adgrams on house\u00adhold income. It is not valid to com\u00adpare the income of an impov\u00ader\u00adished fam\u00adi\u00adly in the 1920s with a sim\u00adi\u00adlar fam\u00adi\u00adly today with\u00adout count\u00ading the val\u00adue of cash wel\u00adfare ben\u00ade\u00adfits, food stamps, Med\u00adic\u00adaid, hous\u00ading assis\u00adtance, help with pay\u00ading util\u00adi\u00adty bills and a range of oth\u00ader ben\u00ade\u00adfits that were unavail\u00adable to peo\u00adple in pre\u00advi\u00adous gen\u00ader\u00ada\u00adtions. These ben\u00ade\u00adfits are con\u00adsid\u00ader\u00adable. Cit\u00ading a Con\u00adgres\u00adsion\u00adal Bud\u00adget Office study<\/a>,<\/span> I not\u00aded that such fam\u00adi\u00adlies receive an aver\u00adage of $3 in ben\u00ade\u00adfits for every $1 they earn. By ignor\u00ading those ben\u00ade\u00adfits, Piketty\u2019s analy\u00adsis may over\u00adstate income inequality.<\/p>\n A recent col\u00adlec\u00adtion of essays<\/a> pub\u00adlished by the Amer\u00adi\u00adcan Enter\u00adprise Insti\u00adtute argues that income isn\u2019t the best mea\u00adsure of inequal\u00adi\u00adty at all. We should gauge inequal\u00adi\u00adty, the authors say, not by the wages and ben\u00ade\u00adfits house\u00adholds receive but by the goods and ser\u00advices they consume.<\/p>\n Con\u00adsump\u00adtion is a bet\u00adter mea\u00adsure of well-being than income. What we buy and con\u00adsume with our income direct\u00adly adds to our util\u00adi\u00adty and hap\u00adpi\u00adness, and also has a direct impact on our stan\u00addard of liv\u00ading [p.35].<\/p><\/blockquote>\n To mea\u00adsure con\u00adsump\u00adtion, Kevin A. Has\u00adsett and Aparna Math\u00adur, whose essay appears in the AEI<\/span> vol\u00adume, use data from the Bureau of Labor Sta\u00adtis\u00adtics (BLS<\/span>) and the Ener\u00adgy Depart\u00adment. The BLS<\/span> Con\u00adsumer Expen\u00addi\u00adture Sur\u00advey mea\u00adsures what house\u00adholds spend and what they spend it on. The prob\u00adlem of inequal\u00adi\u00adty looks very dif\u00adfer\u00adent when exam\u00adined in this way. Dis\u00adpar\u00adi\u00adties between rich and poor appear less extreme, as the table below illustrates.<\/p>\n In 1984, for exam\u00adple, house\u00adholds in the top quin\u00adtile account\u00aded for 37 per\u00adcent of total expen\u00addi\u00adtures while those in the bot\u00adtom quin\u00adtile account\u00aded for 10 per\u00adcent. That is a ratio of 3.7 to 1. By 2010, that ratio had increased to 4.4 to 1 [p. 36]. That still marks an increase in inequal\u00adi\u00adty, but one that is much less pro\u00adnounced and grow\u00ading half as quick\u00adly as dis\u00adpar\u00adi\u00adties in income, as the table shows [p. 37].<\/p>\n Has\u00adsett and Math\u00adur go fur\u00adther, not\u00ading that the BLS<\/span> con\u00adsump\u00adtion data don\u2019t con\u00adsid\u00ader durable goods owned by house\u00adholds. That infor\u00adma\u00adtion is cap\u00adtured in the Ener\u00adgy Department\u2019s Res\u00adi\u00adden\u00adtial Ener\u00adgy Con\u00adsump\u00adtion Sur\u00advey. Com\u00adpar\u00ading data from the 2001 and 2009 sur\u00adveys, the authors found sub\u00adstan\u00adtial increas\u00ades in the per\u00adcent\u00adage of poor house\u00adholds (defined as those with incomes of less than $20,000 in 2009 dol\u00adlars) that owned com\u00adput\u00aders, dish\u00adwash\u00aders, air con\u00addi\u00adtion\u00aders, microwaves, cell\u00adphones and sim\u00adi\u00adlar devices. [p. 36]<\/p>\n Liv\u00ading stan\u00addards are thus improv\u00ading for house\u00adholds at the bot\u00adtom, the authors argue, though they are uncer\u00adtain about the rea\u00adsons for that improvement.<\/p>\n Whether the expla\u00adna\u00adtion for improve\u00adment in liv\u00ading stan\u00addards lies in redis\u00adtri\u00adb\u00adu\u00adtion poli\u00adcies and the growth of the safe\u00adty net, or tech\u00adno\u00adlog\u00adi\u00adcal improve\u00adments that allowed prices of elec\u00adtron\u00adics and oth\u00ader durable goods to drop, or real improve\u00adments in pro\u00adduc\u00adtiv\u00adi\u00adty and wages, the bot\u00adtom line is: peo\u00adple are bet\u00adter off today than they were twen\u00adty or thir\u00adty years ago. House\u00adholds are con\u00adsum\u00ading more and the typ\u00adi\u00adcal low income house\u00adhold pos\u00adsess\u00ades more appli\u00adances and gad\u00adgets that have tra\u00addi\u00adtion\u00adal\u00adly been con\u00adsid\u00adered the pre\u00adserve of the rich than at any time in his\u00adto\u00adry. [p. 38]<\/p><\/blockquote>\n This diverges sharply from the pre\u00advail\u00ading income inequal\u00adi\u00adty nar\u00adra\u00adtive in which the rich are said to have enjoyed vast improve\u00adments in their liv\u00ading stan\u00addards, while the rest have made lit\u00adtle progress, strug\u00adgled to tread water, or lagged far\u00adther behind. Data on house\u00adhold con\u00adsump\u00adtion of durable and non\u00addurable goods presents a much less drea\u00adry pic\u00adture, show\u00ading that liv\u00ading con\u00addi\u00adtions have got\u00adten bet\u00adter in recent decades even for the poor\u00adest fam\u00adi\u00adlies. That this improve\u00adment has occurred despite stag\u00adnant wages sug\u00adgests that income dis\u00adpar\u00adi\u00adties may indeed over\u00adstate the eco\u00adnom\u00adic dis\u00adtance between rich and poor.<\/p>\n No sta\u00adtis\u00adtic mea\u00adsures this dis\u00adtance com\u00adplete\u00adly or with\u00adout dis\u00adtor\u00adtion. There is val\u00adue to tak\u00ading con\u00adsump\u00adtion, as well as income, into account. How\u00adev\u00ader mea\u00adsured, the gap per\u00adsists, is grow\u00ading larg\u00ader, and seems imper\u00advi\u00adous to gov\u00adern\u00adment inter\u00adven\u00adtion in devel\u00adoped coun\u00adtries on both sides of the Atlantic.<\/p>\n While pub\u00adlic assis\u00adtance pro\u00adgrams almost cer\u00adtain\u00adly have damp\u00adened inequal\u00adi\u00adty by pro\u00advid\u00ading mate\u00adr\u00adi\u00adal ben\u00ade\u00adfits to low-income house\u00adholds, in anoth\u00ader sense they have done lit\u00adtle to improve qual\u00adi\u00adty of life. Smart\u00adphones, dish\u00adwash\u00aders and oth\u00ader gad\u00adgets can\u00adnot alle\u00advi\u00adate the psy\u00adchic pover\u00adty that char\u00adac\u00adter\u00adizes the poor\u00adest fam\u00adi\u00adlies. It is a world in which videogame con\u00adsoles and flat screen TVs are far more com\u00admon\u00adly found in the home than fathers and where an esti\u00admat\u00aded one in six<\/a> African Amer\u00adi\u00adcan males have been incarcerated.<\/p>\n This real\u00adi\u00adty defies quan\u00adtifi\u00adca\u00adtion, as does the yawn\u00ading social and cul\u00adtur\u00adal gap between the poor\u00adest fam\u00adi\u00adlies and the elites who run gov\u00adern\u00adments, uni\u00adver\u00adsi\u00adties, Wall Street and the enter\u00adtain\u00adment industry.<\/p>\n That cul\u00adtur\u00adal chasm may help explain why those elites seem at a loss to explain and under\u00adstand, much less to effec\u00adtive\u00adly address, the inequal\u00adi\u00adty problem.<\/p>\n","protected":false},"excerpt":{"rendered":" Is your stan\u00addard of liv\u00ading bet\u00adter mea\u00adsured by what you earn or by what you buy? The ques\u00adtion may seem an odd one, but it is crit\u00adi\u00adcal to under\u00adstand\u00ading the prob\u00adlem of ris\u00ading inequality.<\/p>\n","protected":false},"author":3,"featured_media":2482,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","wp_typography_post_enhancements_disabled":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"nfd_image_url":"","nfd_onboarding_generated":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[18,17,739,726,552],"tags":[673,947,114,906,31,209,750,538,425,946,1184,905],"class_list":["post-2473","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-entitlements","category-inequality-2","category-poverty-2","category-welfare-spending","tag-aei","tag-aparna-mathur","tag-bls","tag-capital-in-the-21st-century","tag-cbo","tag-congressional-budget-office","tag-economic-inequality","tag-food-stamps","tag-inequality","tag-kevin-hassett","tag-medicaid","tag-thomas-piketty"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\n
\n Dis\u00adpar\u00adi\u00adty Ratios: Income Dis\u00adpar\u00adi\u00adties vs. Con\u00adsump\u00adtion Disparities<\/strong><\/td>\n<\/tr>\n \n <\/td>\n 1984<\/strong><\/td>\n 2010<\/strong><\/td>\n<\/tr>\n \n Con\u00adsump\u00adtion Dis\u00adpar\u00adi\u00adty Ratio (BLS<\/span>)<\/td>\n 3.7<\/td>\n 4.4<\/td>\n<\/tr>\n \n Income Dis\u00adpar\u00adi\u00adty Ratio (Cen\u00adsus Bureau)<\/td>\n 11.0<\/td>\n 15.4<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n