The Economic Status Of The Elderly: Beware Of The Mean

Current discussion contains widely contradictory statements about the economic status of the elderly in the United States. One can read that poverty among the elderly has been eliminated, and that it remains one of the most serious problems facing the country today. This paper discusses different ways of measuring economic status, and attempts to show how authors can reach such divergent conclusions, and support them with readily available data. The U.S. Census data on personal income generally exclude in‐kind benefits, and treat family size in a straightforward though unsophisticated manner. This paper shows that alternative treatments of these issues can have significant effects on indices of the economic status of the elderly. Whether or not in‐kind benefits are included in the definition of income, which in‐kind benefits are included and how they are valued change the conclusions dramatically. Even more important is whether the income data are presented by household or per capita (or with some intermediate divisor, using equivalency scales), since elderly households are the smallest of any age category. This paper makes 3 points. One is that there has been significant progress in the economic status of the elderly over the past several decades, although the extent of the improvement is subject to debate. But the second is that summary statistics about the elderly, such as the above, may conceal more than they reveal. The diversity of the elderly is key. Beware of the mean. Finally, there is no one correct way to measure well‐being. Different methodological approaches can be chosen and justified, and the choices made alter the conclusions significantly.