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Household Income Or Household Income Per Capita In Welfare Comparisons

Author

Listed:
  • Gautam Datta
  • Jacob Meerman

Abstract

In studies of income distribution household income is the common measure of household welfare, although household per capita income is better since it automatically “corrects” for household size. Perhaps the continued use of the former is a consequence of the belief that in practice the two give very similar results. This paper shows that in many cases those results differ substantially. Policy prescription based on household income rather than household per capita income can be very defective. The paper compares results according to the two income concepts for Malaysian data. U.S. data are then used in a comparison over time. The disparity between the two Malaysian distributions is illustrated by their cross tabulation. A quarter of the households in the lowest forty percent of the household income distribution is in the upper three quintiles of household per capita income; and 10 percent of the same lowest forty are in the highest two quintiles of the second distribution. The paper also shows that the distribution of benefits from public education‐measured as the public costs of school years—is very inegalitarian if household income is used. The reverse occurs if household per capita income is used. Similar reversals occur in comparisons involving partitions by occupation and sex of head of household. Women‐headed households, for example, have sub‐mean household incomes but their household income per capita equals the mean. The paper also examines the differences in the age‐income profiles of the two distributions. It then considers whether the much discussed secular stagnation in U.S. measures of inequality is changed if household income per capita is used rather than the usual household income measure. Use of the per capita concept results in a slight decrease in U.S. inequality between 1947 and 1972. Appendix 2 explores how long term growth in per capita incomes and the associated changes in the size composition of households may affect measurements of inequality.

Suggested Citation

  • Gautam Datta & Jacob Meerman, 1980. "Household Income Or Household Income Per Capita In Welfare Comparisons," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 26(4), pages 401-418, December.
    • Handle: RePEc:bla:revinw:v:26:y:1980:i:4:p:401-418
    DOI: 10.1111/j.1475-4991.1980.tb00175.x
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    Cited by:

    1. Qing Wang & Jay J Shen & Michelle Sotero & Casey A Li & Zhiyuan Hou, 2018. "Income, occupation and education: Are they related to smoking behaviors in China?," PLOS ONE, Public Library of Science, vol. 13(2), pages 1-17, February.
    2. meng, xin & wu, harry, 1994. "Household Income Determination and Regional Income Differential in Rural China," MPRA Paper 1345, University Library of Munich, Germany.
    3. Mwololo, Henry & Nzuma, Jonathan & Ritho, Cecilia, 2021. "Gender Empowerment Dividends on Smallholder Farm Incomes in Kenya," 2021 Conference, August 17-31, 2021, Virtual 314944, International Association of Agricultural Economists.
    4. Mwololo, Henry Muli & Nzuma, Jonathan Makau & Ritho, Cecilia Nyawira, 2021. "Farmer empowerment in agriculture and its association with smallholder farm incomes in Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 16(4), December.
    5. Ruiz-Castillo, Javier, 1994. "The evolution of the standard of living in Spain, 1973-74 to 1980-81," UC3M Working papers. Economics 2909, Universidad Carlos III de Madrid. Departamento de Economía.
    6. Zhang, Hongwu & Shi, Xunpeng & Wang, Keying & Xue, Jinjun & Song, Ligang & Sun, Yongping, 2020. "Intertemporal lifestyle changes and carbon emissions: Evidence from a China household survey," Energy Economics, Elsevier, vol. 86(C).
    7. Ekström, Erika, 1998. "Income Distribution and Labour Market Discrimination: A Case Study of Namibia," Working Paper Series 502, Research Institute of Industrial Economics.
    8. Wen Jun & Junaid Waheed & Hadi Hussain & Ihsan Jamil & Denisa Borbášová & Muhammad Khalid Anser, 2020. "Working women and per capita household consumption expenditures; an untouched reality," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(1), pages 35-69.
    9. Bhalla, Surjit S. & Leiserson, Mark, 1982. "Issues in the Measurement and Analysis of Income Distribution in Developing Countries: Some Comparative Perspectives," 1982 Conference, August 24-September 2, 1982, Jakarta, Indonesia 182444, International Association of Agricultural Economists.
    10. Shiyu Yan & Jiao Wang & Zhineng Hu, 2023. "Assessment of the effects of targeted poverty alleviation policy on differently poverty‐stricken households: A multi‐propensity score weighting model," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1792-1833, August.
    11. Olgica Ivančev & Milena Jovičić & Tijana Milojević, 2010. "Income Inequality and Social Policy in Serbia," wiiw Balkan Observatory Working Papers 86, The Vienna Institute for International Economic Studies, wiiw.
    12. Mehboob Ahmad, 2000. "Estimation of Distribution of Income in Pakistan, Using Micro Data," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 807-824.
    13. Murathi Kiratu, Nixon, 2014. "An Assessment of the Impact of Kilimo Plus Subsidy Program on Smallholder Farmers' Food Security and Income in Nakuru North District, Kenya," Research Theses 243470, Collaborative Masters Program in Agricultural and Applied Economics.

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