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

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  • Brewer, Mike
  • O'Dea, Cormac

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.

Suggested Citation

  • Brewer, Mike & O'Dea, Cormac, 2012. "Measuring living standards with income and consumption: evidence from the UK," ISER Working Paper Series 2012-05, Institute for Social and Economic Research.
  • Handle: RePEc:ese:iserwp:2012-05
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    File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2012-05.pdf
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    References listed on IDEAS

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    5. 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.
    6. 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.
    7. Harley Frazis & Jay Stewart, 2011. "How does household production affect measured income inequality?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(1), pages 3-22, January.
    8. Richard Blundell & Hamish Low & Ian Preston, 2013. "Decomposing changes in income risk using consumption data," Quantitative Economics, Econometric Society, pages 1-37.
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    10. Andrew Leicester, 2012. "How might in-home scanner technology be used in budget surveys?," IFS Working Papers W12/01, Institute for Fiscal Studies.
    11. Garry Barrett & Peter Levell & Kevin Milligan, 2014. "A Comparison of Micro and Macro Expenditure Measures across Countries Using Differing Survey Methods," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 263-286 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Filer, Randall K. & Hanousek, Jan & Lichard, Tomáš & Torosyan, Karine, 2016. ""Flattening" the Tax Evasion: Evidence from the Post-Communist Natural Experiment," CEPR Discussion Papers 11229, C.E.P.R. Discussion Papers.
    2. Gabriella Donatiello & Marcello D’Orazio & Doriana Frattarola & Antony Rizzi & Mauro Scanu & Mattia Spaziani, 2014. "Statistical Matching of Income and Consumption Expenditures," International Journal of Economic Sciences, University of Economics, Prague, vol. 2014(3), pages 50-65.
    3. Antoine Bozio & Guy Laroque & Cormac O’Dea, 2017. "Discount rate heterogeneity among older households: a puzzle?," Journal of Population Economics, Springer;European Society for Population Economics, pages 647-680.
    4. Tomas Lichard & Jan Hanousek & Randall K. Filer, 2012. "Measuring the Shadow Economy: Endogenous Switching Regression with Unobserved Separation," Economics Working Paper Archive at Hunter College 438, Hunter College Department of Economics.
    5. Thomas F. Crossley & Hamish Low & Cormac O'Dea, 2013. "Household Consumption through Recent Recessions," Fiscal Studies, Institute for Fiscal Studies, pages 203-229.
    6. Tess Penne & Irene Cussó Parcerisas & Lauri Mäkinen & Bérénice Storms & Tim Goedemé, 2016. "Can reference budgets be used as a poverty line?," ImPRovE Working Papers 16/05, Herman Deleeck Centre for Social Policy, University of Antwerp.
    7. Cloyne, James & Ferreira, Clodomiro & Surico, Paolo, 2015. "Monetary Policy when Households have Debt: New Evidence on the Transmission Mechanism," CEPR Discussion Papers 11023, C.E.P.R. Discussion Papers.
    8. Figari, Francesco & Paulus, Alari & Sutherland, Holly, 2014. "Microsimulation and policy analysis," ISER Working Paper Series 2014-23, Institute for Social and Economic Research.
    9. Paolo Surico & Clodomiro Ferreira & James Cloyne, 2015. "Housing Debt and the Transmission of Monetary Policy," 2015 Meeting Papers 629, Society for Economic Dynamics.
    10. Claire Lebarz, 2015. "Income Inequality and Household Debt Distribution: A Cross-Country Analysis using Wealth Surveys," LWS Working papers 20, LIS Cross-National Data Center in Luxembourg.

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