July 31, 2016

NO ONE HAS IT HARDER THAN THEIR FATHER DID:

A Reason for Optimism : Americans across the economic spectrum are consuming more than they used to. (ROBERT VERBRUGGEN • July 25, 2016, American Conservative)

New research from the economists Bruce D. Meyer and James X. Sullivan lays out the data. Bottom line: consumption inequality is less dramatic than income inequality, and there's no shocking upward trend. What's more, Americans across the economic spectrum are consuming a lot more than they used to. (The final paper is forthcoming, but you can see an early version of it here.)

Here's a chart from the paper depicting "90/10" inequality, referring to the well-being of the 90th and 10th percentiles. By the authors' various consumption measures, the well-to-do are only about four times better off than the struggling--as opposed to seven times if we use after-tax income (the top line). And consumption inequality has actually fallen since the recession.

Source: Meyer and Sullivan (forthcoming)

The authors also present basic consumption numbers for 1980 and 2014 that are adjusted for inflation. As shown in this chart calculated from their data, by every measure, families in every quintile saw their consumption rise at least 50 percent.

ConRising

Consumption isn't necessarily a "better" measure of well-being than income, but it has many advantages. For one thing, incomes can fluctuate wildly from year to year as people lose jobs or experience financial windfalls, while consumption tends to be steadier. For another, income among the poor tends to be wildly underreported, thanks to a rising tendency of people not to acknowledge the money they receive from safety-net programs.

We won the war on poverty.

Posted by at July 31, 2016 10:19 AM

  

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