Measuring The Distribution Of Well-Being: Why Income and Consumption Give Different Answers
AbstractAnnual, before-tax income is the most common official statistic used to measure economic well-being and therefore underlies the design of most anti-poverty programs or other redistributive economic policies. Notwithstanding, extended income measures as well as consumption based measures are gaining increasing currency in scientific analysis of economic well-being. Our findings suggest that a consumption-based measure gives very different answers about relative economic standing across income and age groups, and somewhat different answers about trends in resources over time. More importantly, by explicitly measuring the relationship between income and consumption across groups and time, we are able to evaluate how differences in effective taxation, saving rates, and investment in consumer durables affect the alternative measures of economic well-being.
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Bibliographic InfoPaper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-201.
Length: 31 pages
Date of creation: Mar 1997
Date of revision:
Economic Welfare; Measurement of Inequality; Demographic Economics; Income; Saving; Consumption; Taxation;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- J1 - Labor and Demographic Economics - - Demographic Economics
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