IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v70y2003i1p22-48.html
   My bibliography  Save this article

The Influence of Demographics and Household‐Specific Price Indices on Consumption‐Based Inequality and Welfare: A Comparison of Spain and the United States

Author

Listed:
  • Thesia I. Garner
  • Javier Ruiz‐Castillo
  • Mercedes Sastre

Abstract

Previous research has suggested that inequality is lower in Spain than in the United States when it is based on income. For the present article, both inequality and social welfare are examined, with household consumption expenditures used as a proxy for household welfare. For tractability, equivalence scales depended only on the number of people in the household. Household‐specific price indices were used to express the 1990‐1991 expenditure distributions in 1981 and 1991 winter prices. Our results reveal that inequality and welfare comparisons are drastically different for smaller and larger households. When all households are considered, the two‐country comparison suggests that the income inequality ranking can only be maintained for expenditure distributions when economies of scale are small or nonexistent. However, welfare is always higher in the United States than in Spain. Because inflation during the 1980s in both countries was essentially distributionally neutral, all results appear to be robust to the choice of time period.

Suggested Citation

  • Thesia I. Garner & Javier Ruiz‐Castillo & Mercedes Sastre, 2003. "The Influence of Demographics and Household‐Specific Price Indices on Consumption‐Based Inequality and Welfare: A Comparison of Spain and the United States," Southern Economic Journal, John Wiley & Sons, vol. 70(1), pages 22-48, July.
    • Handle: RePEc:wly:soecon:v:70:y:2003:i:1:p:22-48
    DOI: 10.1002/j.2325-8012.2003.tb00554.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/j.2325-8012.2003.tb00554.x
    Download Restriction: no
    File URL: https://libkey.io/10.1002/j.2325-8012.2003.tb00554.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    2. Garry F. Barrett & Thomas F. Crossley & Christopher Worswick, 2000. "Consumption and Income Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 76(233), pages 116-138, June.
    3. Gottschalk, Peter & Smeeding, Timothy M., 2000. "Empirical evidence on income inequality in industrialized countries," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 5, pages 261-307, Elsevier.
    4. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
    5. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-467, June.
    6. Jean‐Yves Duclos & Magda Mercader‐Prats, 1999. "Household Needs And Poverty: With Application To Spain And The U.K," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 77-98, March.
    7. Jesús Ruiz-Huerta & Luis Ayala & Rosa Martinez, 1999. "Inequality, Growth and Welfare: An International Comparison," LIS Working papers 215, LIS Cross-National Data Center in Luxembourg.
    8. repec:bla:revinw:v:37:y:1991:i:4:p:363-86 is not listed on IDEAS
    9. Garry F. Barreti & Tomas F. Crossley & Christopher Worswick, 2000. "Demographic Trends And Consumption Inequality In Australia Between 1975 And 1993," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(4), pages 437-456, December.
    10. Quentin T. Wodon, 1999. "Between Group Inequality And Targeted Transfers," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 21-39, March.
    11. Bishop, John A & Chakraborti, S & Thistle, Paul D, 1994. "Relative Inequality, Absolute Inequality, and Welfare: Large Sample Tests for Partial Orders," Bulletin of Economic Research, Wiley Blackwell, vol. 46(1), pages 41-59, January.
    12. Tsakloglou, Panos, 1992. "Inequality and Welfare in EEC Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 44(1), pages 21-37, January.
    13. Jenkins,Stephen P. & Kapteyn,Arie & Praag,Bernard M. S. van (ed.), 1998. "The Distribution of Welfare and Household Production," Cambridge Books, Cambridge University Press, number 9780521623025, January.
    14. Denial T. Slesnick, 1991. "The Standard Of Living In The United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 363-386, December.
    15. Jenkins, Stephen P & Cowell, Frank A, 1994. "Parametric Equivalence Scales and Scale Relativities," Economic Journal, Royal Economic Society, vol. 104(425), pages 891-900, July.
    16. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-1082, September.
    17. repec:bla:revinw:v:34:y:1988:i:2:p:115-42 is not listed on IDEAS
    18. Mills, Jeffrey A & Zandvakili, Sourushe, 1997. "Statistical Inference via Bootstrapping for Measures of Inequality," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(2), pages 133-150, March-Apr.
    19. Slesnick, Daniel T, 1993. "Gaining Ground: Poverty in the Postwar United States," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 1-38, February.
    20. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    21. repec:bla:revinw:v:43:y:1997:i:3:p:319-33 is not listed on IDEAS
    22. Stephen P. Jenkins, 1991. "Income Inequality and Living standards: Changes in the 1970s and 1980s," Fiscal Studies, Institute for Fiscal Studies, vol. 12(1), pages 1-28, February.
    23. Richard V. Burkhauser & Timothy M. Smeeding & Joachim Merz, 1996. "Relative Inequality And Poverty In Germany And The United States Using Alternative Equivalence Scales," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(4), pages 381-400, December.
    24. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Wiley Blackwell, vol. 44(2), pages 77-124, April.
    25. Krishna Pendakur, 1998. "Changes In Canadian Family Income And Family Consumption Inequality Between 1978 And 1992," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(2), pages 259-282, June.
    26. Daniel T. Slesnick, 1998. "Empirical Approaches to the Measurement of Welfare," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2108-2165, December.
    27. Cowell, Frank & Litchfield, Julie & Mercader-Prats, Magda, 1999. "Income inequality comparisons with dirty data: the UK and Spain during the 1980s," LSE Research Online Documents on Economics 2240, London School of Economics and Political Science, LSE Library.
    28. repec:bla:econom:v:50:y:1983:i:197:p:3-17 is not listed on IDEAS
    29. Miguel Govela & José Tavares, 1995. "The Distribution Of Household Income And Expenditure In Portugal: 1980 And 1990," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(1), pages 1-17, March.
    30. Klaas de Vos & M. Asghar Zaidi, 1997. "Equivalence Scale Sensitivity Of Poverty Statistics For The Member States Of The European Community," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(3), pages 319-333, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Harms, Philipp & Beck, Günter & Hussain, Muzammil & Ruszel, Mark, 2024. "Anti-poor and anti-rich: product-downgrading and the distributional effects of UK inflation in the wake of the Brexit vote," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302365, Verein für Socialpolitik / German Economic Association.
    2. repec:ags:ijag24:346768 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Coral del Río & Javier Ruiz-Castillo, 2001. "TIPs for poverty analysis. The case of Spain, 1980-81 to 1990-91," Investigaciones Economicas, Fundación SEPI, vol. 25(1), pages 63-91, January.
    2. Garner, Thesia I. & Sastre, Mercedes, 1999. "The influence of demographic and household specific price indices on expenditure based inequality and welfare: a comparison of Spain and the United States," UC3M Working papers. Economics 6165, Universidad Carlos III de Madrid. Departamento de Economía.
    3. Eva Sierminska & Thesia Garner, 2002. "A Comparison of Income, Expenditures, and Home Market Value Distributions using Luxembourg Income Study Data from the 1990s," LIS Working papers 338, LIS Cross-National Data Center in Luxembourg.
    4. repec:cte:werepe:2909 is not listed on IDEAS
    5. Paul Makdissi & Quentin Wodon, 2004. "Migration, poverty, and housing in Honduras," Estudios de Economia, University of Chile, Department of Economics, vol. 31(1 Year 20), pages 5-20, June.
    6. Thomas F. Crossley & Krishna Pendakur, 2002. "Consumption Inequality," Department of Economics Working Papers 2002-09, McMaster University.
    7. Mysikova, Martina & Zelinsky, Tomas, 2019. "On the Measurement of the Income Poverty Rate: the Equivalence Scale across Europe," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 99(4), pages 383-397.
    8. Ruiz-Castillo, Javier & Ley, Eduardo & Izquierdo, Mario, 2002. "Distributional aspects of the quality change bias in the CPI: evidence from Spain," Economics Letters, Elsevier, vol. 76(1), pages 137-144, June.
    9. Christos Koulovatianos & Carsten Schröder, 2023. "Income-dependent equivalence scales and choice theory: implications for poverty measurement," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 4, pages 39-49, Edward Elgar Publishing.
    10. Matilde Mas Ivars & Francisco José Goerlich Gisbert, 1999. "- Desigualdad Y Convergencia," Working Papers. Serie EC 1999-07, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    11. Timm Bönke & Carsten Schröder, 2007. "Inequality and welfare estimates using two alternative weighting schemes," LIS Working papers 463, LIS Cross-National Data Center in Luxembourg.
    12. Hillringhaus, Tilman & Peichl, Andreas, 2010. "Die Messung von Armut unter Berücksichtigung regional divergierender Lebenshaltungskosten und öffentlicher Leistungen," IZA Discussion Papers 5344, Institute of Labor Economics (IZA).
    13. Río, Coral del, 1997. "Demographic trends and living standards the case of Spain during the 1980´s," UC3M Working papers. Economics 6060, Universidad Carlos III de Madrid. Departamento de Economía.
    14. Anthony Shorrocks & Daniel Slottje, 2002. "Approximating unanimity orderings: An application to Lorenz dominance," Journal of Economics, Springer, vol. 9(1), pages 91-117, December.
    15. Angela Daley & Thesia Garner & Shelley Phipps & Eva Sierminska, 2020. "Differences across countries and time in household expenditure patterns: implications for the estimation of equivalence scales," International Review of Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 734-757, November.
    16. Regan, Mark & Kakoulidou, Theano, 2022. "How important are the unit of analysis and equivalence scales when measuring income poverty and inequality? Evidence from Ireland," Papers WP721, Economic and Social Research Institute (ESRI).
    17. Núñez Velázquez, José Javier, 2009. "Estado actual y nuevas aproximaciones a la medición de la pobreza/Current Status and New Approaches to the Measurement of Poverty," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 27, pages 325-346, Agosto.
    18. Sunil Kumar & Renuka Mahadevan, 2008. "Construction of An Adult Equivalence Index to Measure Intra-household Inequality and Poverty: Case Study," Discussion Papers Series 363, School of Economics, University of Queensland, Australia.
    19. Frank A Cowell & Julie Litchfield, 1999. "Income Inequality Comparisons with Dirty Data: The UK and Spain during the 1980s," STICERD - Distributional Analysis Research Programme Papers 45, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    20. Pendakur, Krishna, 2002. "Taking prices seriously in the measurement of inequality," Journal of Public Economics, Elsevier, vol. 86(1), pages 47-69, October.
    21. Bruce Headey & Ruud Muffels & Mark Wooden, 2004. "Money Doesn't Buy Happiness … or Does It? A Reconsideration Based on the Combined Effects of Wealth, Income and Consumption," Melbourne Institute Working Paper Series wp2004n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:70:y:2003:i:1:p:22-48. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.