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Household wealth, public consumption and economic well-being in the United States

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  • Edward N. Wolff
  • Ajit Zacharias
  • Asena Caner

Abstract

Standard official measures of household economic well-being in several countries are based on money income. The general consensus is that such measures are limited because they ignore certain crucial determinants of well-being. We examine two such determinants--household wealth and public consumption--in the context of the US. Our findings suggest that the level and distribution of economic well-being is substantially altered when money income is adjusted for wealth or public consumption. Over the 1989--2000 period, median well-being appears to increase faster when these adjustments are made than when standard money income is used. Adding imputed rent and annuity from household wealth to household income increases measured inequality, while adding public consumption reduces it. However, all three measures show about the same rise in inequality over the period. Copyright 2005, Oxford University Press.

Suggested Citation

  • Edward N. Wolff & Ajit Zacharias & Asena Caner, 2005. "Household wealth, public consumption and economic well-being in the United States," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(6), pages 1073-1090, November.
    • Handle: RePEc:oup:cambje:v:29:y:2005:i:6:p:1073-1090
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    File URL: http://hdl.handle.net/10.1093/cje/bei076
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    References listed on IDEAS

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    1. Donald L. Lerman & James J. Mikesell, 1988. "Impacts of Adding Net Worth to the Poverty Definition," Eastern Economic Journal, Eastern Economic Association, vol. 14(4), pages 357-370, Oct-Dec.
    2. Asena Caner & Ed Wolff, 2002. "Asset Poverty in the United States, 1984-1999: Evidence from the Panel Study of Income Dynamics," Microeconomics 0209002, University Library of Munich, Germany.
    3. Timothy M. Smeeding & Daniel H. Weinberg, 2001. "Toward a Uniform Definition of Household Income," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 1-24, March.
    4. Patricia Ruggles & Michael O'Higgins, 1981. "The Distribution Of Public Expenditure Among Households In The United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 27(2), pages 137-164, June.
    5. repec:bla:revinw:v:27:y:1981:i:2:p:137-64 is not listed on IDEAS
    6. Edward N. Wolff & Ajit Zacharias, 2003. "The Levy Institute Measure of Economic Well-Being," Economics Working Paper Archive wp_372, Levy Economics Institute.
    7. Asena Caner & Edward Wolff, 2004. "Asset Poverty in the United States, 1984-1999," Challenge, Taylor & Francis Journals, vol. 47(1), pages 5-52.
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    Cited by:

    1. Constantin Anghelache & Madalina Gabriela Anghel & Marius Popovici, 2015. "Multiple Regressions Used in Analysis of Private Consumption and Public Final Consumption Evolution," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 69-73, October.
    2. Francisco Azpitarte, 2010. "The household wealth distribution in Spain: The role of housing and financial wealth," Hacienda Pública Española / Review of Public Economics, IEF, vol. 194(3), pages 65-90, October.
    3. Francisco Azpitarte, 2008. "The Household Wealth Distribution in Spain: The Role of Housing and Financial Wealth," Working Papers 83, ECINEQ, Society for the Study of Economic Inequality.
    4. Teixidó, Jordi J. & Verde, Stefano F., 2017. "Is the Gasoline Tax Regressive in the Twenty-First Century? Taking Wealth into Account," Ecological Economics, Elsevier, vol. 138(C), pages 109-125.
    5. Antonio Jurado & Jesus Perez-Mayo, 2012. "Construction and Evolution of a Multidimensional Well-Being Index for the Spanish Regions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 107(2), pages 259-279, June.
    6. Deborah Cobb-Clark, 2007. "Pushing the boundaries of immigration research: What can we learn from New Zealand?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 41(2), pages 123-130.
    7. Fabio Boncinelli & Leonardo Casini, 2014. "A Comparison of the Well-Being of Agricultural and Non Agricultural Households Using a Multicriterial Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 119(1), pages 183-195, October.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D6 - Microeconomics - - Welfare Economics
    • H4 - Public Economics - - Publicly Provided Goods
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

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