It has been argued that consumption is a more appropriate measure of household wellbeing than income or earnings. Using four Household Expenditures Surveys collected by the Australian Bureau of Statistics between 1975 and 1993, we examine trends in consumption inequality among Australian households and compare consumption inequality with income inequality. We find that consumption is much more equal than income. Further, while both income and consumption inequality rose by statistically and economically significant amounts over the period covered by our survey, consumption inequality rose by much less. For example, the Gini coefficient for equivalent gross income inequality rose by 0.043 (17%) while the Gini coefficient for equivalent nondurable consumption rose by 0.019 (9%). We discuss possible interpretations of these differences. Through a series of specification checks we are able to rule out several ways in which the result might be spurious, or an artifact of our methodological choices. One interpretation of the results is that some income inequality in Australia reflects transitory fluctuations which households can smooth, and that some of the growth in income inequality over the study period reflects an increase in these transitory fluctuations.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Centre for Economic Policy Research, Research School of Social Sciences, Australian National University in its series Discussion Papers with number
404.
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.)