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Income Inequality and Income-Class Consumption Patterns

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  • LaVaughan Henry

Abstract

This Commentary investigates whether there has been a growing divergence in the consumption of luxury and necessity goods across income classes. The analysis shows that while necessities represent a majority of the consumption basket for lower and middle income quintiles, their consumption of necessities in inflation-adjusted dollars has been declining in the face of higher prices of such goods and stagnant income growth. Higher income quintiles have seen increases in their consumption of luxuries, simultaneous with a decline in their consumption of necessities.

Suggested Citation

  • LaVaughan Henry, 2014. "Income Inequality and Income-Class Consumption Patterns," Economic Commentary, Federal Reserve Bank of Cleveland, issue Oct.
    • Handle: RePEc:fip:fedcec:00023
    DOI: 10.26509/frbc-ec-201418
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    Cited by:

    1. Renaud Bourlès & Michael T. Dorsch & Paul Maarek, 2019. "Income Taxation and the Diversity of Consumer Goods: A Political Economy Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 960-993, July.
    2. Andersson, Fredrik N.G., 2023. "Income inequality and carbon emissions in the United States 1929–2019," Ecological Economics, Elsevier, vol. 204(PA).
    3. Balabanis, George & Stathopoulou, Anastasia, 2021. "The price of social status desire and public self-consciousness in luxury consumption," Journal of Business Research, Elsevier, vol. 123(C), pages 463-475.

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