Skip to main content

Has Consumption Inequality Mirrored Income Inequality?

Author(s): Aguiar, Mark A.; Bils, Mark

To refer to this page use:
Abstract: We revisit to what extent the increase in income inequality since 1980 was mirrored by consumption inequality. We do so by constructing an alternative measure of consumption expenditure using a demand system to correct for systematic measurement error in the Consumer Expenditure Survey. Our estimation exploits the relative expenditure of high- and low-income households on luxuries versus necessities. This double differencing corrects for measurement error that can vary over time by good and income. We find consumption inequality tracked income inequality much more closely than estimated by direct responses on expenditures.
Publication Date: Sep-2015
Citation: Aguiar, Mark A., Bils, Mark. (2015). Has Consumption Inequality Mirrored Income Inequality? American Economic Review, 105 (9), 2725 - 2756. doi:10.1257/aer.20120599
DOI: doi:10.1257/aer.20120599
ISSN: 0002-8282
Pages: 2725 - 2756
Type of Material: Journal Article
Journal/Proceeding Title: American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

Items in OAR@Princeton are protected by copyright, with all rights reserved, unless otherwise indicated.