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Income, expenditure and the living standards of UK households

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Author Info
Richard Blundell () (Institute for Fiscal Studies and University College London)
Ian Preston () (Institute for Fiscal Studies and University College London)

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Abstract

Despite the widespread use of income as a measure of household welfare, there is much to recommend the use of consumption. Indeed, standard economic arguments suggest that consumption expenditure will better reflect expected lifetime resources and many economists have been unequivocal in advocating its use. Slesnick (1993), for example, suggests that ‘From a theoretical perspective it is more appropriate to evaluate poverty using a consumption based measure of household welfare’. Cutler and Katz (1992) state that ‘Economic theory suggests that permanent income or consumption is a more accurate measure of the distribution of resources than is current income’. Poterba (1989) argues that `If households base their spending plans on their expected lifetime income, then consumption provides a more accurate measure of resources than does annual income’.

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Publisher Info
Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 16 (1995)
Issue (Month): 3 (August)
Pages: 40-54
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Handle: RePEc:ifs:fistud:v:16:y:1995:i:3:p:40-54

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Blundell, Richard & Browning, Martin & Meghir, Costas, 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures," Review of Economic Studies, Blackwell Publishing, vol. 61(1), pages 57-80, January. [Downloadable!] (restricted)
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  2. Poterba, James M, 1989. "Lifetime Incidence and the Distributional Burden of Excise Taxes," American Economic Review, American Economic Association, vol. 79(2), pages 325-30, May. [Downloadable!] (restricted)
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  3. Banks, James & Blundell, Richard & Preston, Ian, 1994. "Life-cycle expenditure allocations and the consumption costs of children," European Economic Review, Elsevier, vol. 38(7), pages 1391-1410, August. [Downloadable!] (restricted)
  4. Deaton, A. & Grosh, M., 1998. "Consumption," Papers 191, Princeton, Woodrow Wilson School - Development Studies.
  5. McClements, L. D., 1977. "Equivalence scales for children," Journal of Public Economics, Elsevier, vol. 8(2), pages 191-210, October. [Downloadable!] (restricted)
  6. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March. [Downloadable!] (restricted)
  7. Slesnick, Daniel T, 1993. "Gaining Ground: Poverty in the Postwar United States," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 1-38, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Whitehouse, Edward, 2000. "How Poor are the Old? A Survey of Evidence from 44 Countries," MPRA Paper 14177, University Library of Munich, Germany. [Downloadable!]
  2. Adriaan S. Kalwij & Rob Alessie, 2003. "Permanent and Transitory Wage Inequality of British Men, 1975-2001: Year, Age and Cohort Effects," Working Papers 03-04, Utrecht School of Economics. [Downloadable!]
    Other versions:
  3. Alissa Goodman & Steven Webb, 1995. "The distribution of UK household expenditure, 1979-92," Fiscal Studies, Institute for Fiscal Studies, vol. 16(3), pages 55-80, August. [Downloadable!]
  4. Erich Battistin & Richard Blundell & Arthur Lewbel, 2007. "Why is Consumption More Log Normal Than Income? Gibrat's Law Revisited," Boston College Working Papers in Economics 671, Boston College Department of Economics. [Downloadable!]
    Other versions:
  5. Manoj K. Pandey, 2009. "Poverty and Disability among Indian Elderly: Evidence from Household Survey," ASARC Working Papers 2009-10, Australian National University, Australia South Asia Research Centre. [Downloadable!]
  6. Koeniger, Winfried, 2001. "Labor and Financial Market Interactions: The Case of Labor Income Risk and Car Insurance in the UK 1969-95," IZA Discussion Papers 240, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Ken Judge & Iain Paterson, 2001. "Poverty, Income Inequality and Health," Treasury Working Paper Series 01/29, New Zealand Treasury. [Downloadable!]
  8. Thomas F. Crossley & Krishna Pendakur, 2002. "Consumption Inequality," Department of Economics Working Papers 2002-09, McMaster University. [Downloadable!]
  9. Richard Blundell & Hamish Low & Ian Preston, 2008. "Decomposing changes in income risk using consumption data," IFS Working Papers W08/13, Institute for Fiscal Studies. [Downloadable!]
  10. Richard Dickens, 1996. "The Evolution of Individual Male Earnings in Great Britain 1974-1994," CEP Discussion Papers dp0306, Centre for Economic Performance, LSE. [Downloadable!]
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