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Measuring living standards with income and consumption: evidence from the UK

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Author Info

  • Mike Brewer

    ()
    (Institute for Fiscal Studies and ISER, Essex University)

  • Cormac O'Dea

    ()
    (Institute for Fiscal Studies)

Abstract

This paper compares consumption and income as measures of households’ living standards using UK data. It presents evidence that income is likely to be under-recorded for households with low resources. It describes the different impressions one gets about trends in the level and inequality of living standards in the UK when using consumption, and when one adds an imputed income from housing, rather than near-cash income. It describes what different impressions one gets about the composition of households with low living standards if these are identified with consumption rather than income.

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File URL: http://www.ifs.org.uk/wps/wp1212.pdf
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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W12/12.

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Date of creation: Jul 2012
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Handle: RePEc:ifs:ifsewp:12/12

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Related research

Keywords: consumption; measuring living standards; inequality; poverty;

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References

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  1. 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.
  2. Poterba, J.M., 1989. "Lifetime Incidence And The Distributional Burden Of Excise Taxes," Working papers 510, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Garry Barrett & Peter Levell & Kevin Milligan, 2012. "A Comparison of Micro and Macro Expenditure Measures across Countries using Differing Survey Methods," NBER Chapters, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  4. Blundell, Richard & Low, Hamish & Preston, Ian, 2011. "Decomposing Changes in Income Risk Using Consumption Data," IZA Discussion Papers 6125, Institute for the Study of Labor (IZA).
  5. Kevin Milligan, 2007. "The Evolution of Elderly Poverty in Canada," Social and Economic Dimensions of an Aging Population Research Papers 170, McMaster University.
  6. Richard Blundell & Ian Preston, 1998. "Consumption Inequality And Income Uncertainty," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 603-640, May.
  7. Harley Frazis & Jay Stewart, 2011. "How does household production affect measured income inequality?," Journal of Population Economics, Springer, vol. 24(1), pages 3-22, January.
  8. repec:ese:iserwp:2009-33 is not listed on IDEAS
  9. Andrew Leicester, 2012. "How might in-home scanner technology be used in budget surveys?," IFS Working Papers W12/01, Institute for Fiscal Studies.
  10. Richard Blundell & Ben Etheridge, 2010. "Consumption, Income and Earnings Inequality in Britain," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 76-102, January.
  11. Romina Boarini & Marco Mira d'Ercole, 2006. "Measures of Material Deprivation in OECD Countries," OECD Social, Employment and Migration Working Papers 37, OECD Publishing.
  12. Sutherland, Holly & DeCoster, Andre & Matsaganis, Manos & Tsakloglou, Panos, 2009. "Accurate income measurement for the assessment of public policies: final report," EUROMOD Working Papers EM7/09, EUROMOD at the Institute for Social and Economic Research.
  13. John Sabelhaus & Jeffrey A. Groen, 2000. "Can Permanent-Income Theory Explain Cross-Sectional Consumption Patterns?," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 431-438, August.
  14. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
  15. Richard Bavier, 2008. "Reconciliation of income and consumption data in poverty measurement," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(1), pages 40-62.
  16. Dirk Krueger & Fabrizio Perri, 2006. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory -super-1," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 163-193.
  17. Matthew Brzozowski & Thomas F. Crossley, 2011. "Viewpoint: Measuring the well-being of the poor with income or consumption: a Canadian perspective," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 88-106, February.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. On measuring income standards
    by Economic Logician in Economic Logic on 2012-09-07 14:24:00
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  1. repec:ese:iserwp:2013-26 is not listed on IDEAS

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