Household wealth and the measurement of economic well-being in the United States
Abstract
The standard official measure of household economic well-being in the United States is gross money income. The general consensus is that such measures are limited because they ignore other crucial determinants of well-being. We modify the standard measure to account for one such determinant: household wealth. We then analyze the level and distribution of economic well-being in the United States during the 1980s and 1990s, using the standard measure and a measure that differs from the standard in that income from wealth is calculated as the sum of lifetime annuity from nonhome wealth and imputed rental-equivalent for owner-occupied homes. Our findings indicate that the level and distribution of economic well-being is substantially altered when money income is adjusted for wealth. Over the 1989Ã2000 period, median well-being appears to increase faster when these adjustments are made than when standard money income is used. This adjustment also widens the income gap between African Americans and whites, but increases the relative well-being of the elderly. Adding imputed rent and annuities from household wealth to household income considerably increases measured inequality and the share of income from wealth in inequality. However, both measures show about the same rise in inequality over the period. Our results contradict the assertion that the Ãworking richà have replaced the rentiers at the top of the economic ladder.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Article provided by Springer in its journal The Journal of Economic Inequality.
Volume (Year): 7 (2009)
Issue (Month): 2 (June)
Pages: 83-115
Contact details of provider:
Web page: http://springerlink.metapress.com/link.asp?id=111137
Related research
Keywords: Living standards; Household wealth; Inequality; D31; D6; H4; P16;Other versions of this item:
- Edward N. Wolff & Ajit Zacharias, 2006. "Household Wealth and the Measurement of Economic Well-Being in the United States," Economics Working Paper Archive wp_447, Levy Economics Institute, The.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D6 - Microeconomics - - Welfare Economics
- H4 - Public Economics - - Publicly Provided Goods
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
References
References listed on IDEASPlease 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.:
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Thomas Piketty, 2010.
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PSE Working Papers
halshs-00564853, HAL.
- Thomas Piketty, 2011. "On the Long-Run Evolution of Inheritance: France 1820--2050," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1071-1131.
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- Fräßdorf, Anna & Grabka, Markus M. & Schwarze, Johannes, 2011. "The Impact of Household Capital Income on Income Inequality - A Factor Decomposition Analysis for the UK, Germany and the USA," EconStor Open Access Articles, ZBW - German National Library of Economics.
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"Revisiting the Income-Health Nexus: The Importance of Choosing the "Right" Indicator,"
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- Ziebarth, Nicolas R. & Frick, Joachim R., 2010. "Revisiting the Income-Health Nexus: The Importance of Choosing the "Right" Indicator," IZA Discussion Papers 4787, Institute for the Study of Labor (IZA).
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- Yun Kim & Mark Setterfield & Yuan Mei, 2013. "A Theory of Aggregate Consumption," Working Papers 1301, Trinity College, Department of Economics.
- Mark Setterfield, 2012. "Real Sector Imbalances and the Great Recession," Working Papers 1201, Trinity College, Department of Economics.
- Alessandra Michelangeli & Eugenio Peluso & Alain Trannoy, 2011. "Detecting a change in wealth concentration without the knowledge of the wealth distribution," Journal of Economic Inequality, Springer, vol. 9(3), pages 373-391, September.
- Thomas Masterson & Ajit Zacharias & Selcuk Eren & Edward Wolff, 2011. "The Levy Institute Measure of Economic Well-Being, France, 1989 and 2000," Economics Working Paper Archive wp_679, Levy Economics Institute, The.
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