Separate but unequal: Charts show growing rich-poor gap

[bpwallace49]

I am not sure if you misread my post or are just quoting it for some other reason, but your response really doesn't have anything to do with the parallel I proposed. I never mentioned communism.

 

What do you think you will find if you compare the proportion of this gap with the proportion of government as a % of GDP?

 

 

So the reason for this is the evil gubment?

[Perchoutofwater]

I am not sure if you misread my post or are just quoting it for some other reason, but your response really doesn't have anything to do with the parallel I proposed. I never mentioned communism.

 

What do you think you will find if you compare the proportion of this gap with the proportion of government as a % of GDP?

 

You make a very good point.

 

You might also look at welfare which is another form of income for the lower quintile.

 

We should also look at health care, again another form of income.

 

And keeping with the news of the day, let's not forget those ridiculous government pensions where the government on average provides twice as much as the private sector, because you know the tax payers can afford it.

Edited February 25, 2011 by Perchoutofwater

[wiegie]

Yeah . . . about halfway through the 42 page academic paper now wiegie. Patience.

I give you permission to skip the appendix

[Caveman_Nick]

 

So the reason for this is the evil gubment?

 

 

What's funny about it?

[yo mama]

I am not sure if you misread my post or are just quoting it for some other reason, but your response really doesn't have anything to do with the parallel I proposed. I never mentioned communism.

 

What do you think you will find if you compare the proportion of this gap with the proportion of government as a % of GDP?

Because I'm flirting with you?

[bushwacked]

We should also look at health care, again another form of income.

 

 

Good Lord.

[BeeR]

What exactly is your point? Do you have a suggestion on how to fix this problem? What are we supposed to do? Just take money from the evil rich and hand it to the poor? We have more freeloaders now than ever, I guess we should just make everyone even whether they deserve it or not.

 

I question a lot of these "facts" too. That whole "widening of the gap between rich and poor" has been a rant since before any of us were born, yet amazingly, when I look around, a great many (most?) neigborhoods aren't esp lavish or bad.

Edited February 26, 2011 by BeeR

[wiegie]

also, good editorial from the Economist

consumption inequality has barely budged for several decades, despite a sharp upswing in income inequality.

 

oops: http://www.nber.org/papers/w16807.pdf?new_window=1

 

Has Consumption Inequality Mirrored Income Inequality?

 

Mark A. Aguiar, Mark Bils

NBER Working Paper No. 16807

Issued in February 2011

NBER Program(s): EFG

 

We revisit to what extent the increase in income inequality over the last 30 years has been mirrored by consumption inequality. We do so by constructing two alternative measures of consumption expenditure, using data from the Consumer Expenditure Survey (CE). We first use reports of active savings and after tax income to construct the measure of consumption implied by the budget constraint. We find that the consumption inequality implied by savings behavior largely tracks income inequality between 1980 and 2007. Second, we use a demand system to correct for systematic measurement error in the CE's expenditure data. Specifically, we consider trends in the relative expenditure of high income and low income households for different goods with different income (total expenditure) elasticities. Our estimation exploits the difference in the growth rate of luxury consumption inequality versus necessity consumption inequality. This "double-differencing,'' which we implement in a a regression framework, corrects for mis-measurement that can systematically vary over time by good and income group. This second exercise indicates that consumption inequality has closely tracked income inequality over the period 1980-2007. Both of our measures show a significantly greater increase in consumption inequality than what is obtained from the CE's total household expenditure data directly.

[tonorator]

Was the country prior to Reagan communist? Cause that is what you are implying.

 

You have no idea what you are talking about. please stop.

[WaterMan]

We have more unemployed now than [almost] ever, I guess we should just make everyone even whether they deserve it or not.

 

This second exercise indicates that consumption inequality has closely tracked income inequality over the period 1980-2007

 

So this means the poor aren't magically buying up all the XBOXs and Porches from welfare checks and recycling soda cans?

Edited February 26, 2011 by WaterMan

[Azazello1313]

oops: http://www.nber.org/papers/w16807.pdf?new_window=1

 

so, are you saying the editorial board from The Economist is lying? I guess we could play dueling abstracts

 

Does Income Inequality Lead to Consumption Inequality?

Evidence and Theory

 

Dirk Krueger

Goethe University Frankfurt, University of Pennsylvania, NBER and CEPR

Fabrizio Perri

New York University, Federal Reserve Bank of Minneapolis, NBER and CEPR

 

Abstract

Using data from the Consumer Expenditure Survey, we first document that the recent

increase in income inequality in the United States has not been accompanied by a corre-

sponding rise in consumption inequality. Much of this divergence is due to different trends

in within-group inequality, which has increased significantly for income but little for con-

sumption. We then develop a simple framework that allows us to analytically characterize

how within-group income inequality affects consumption inequality in a world in which agents

can trade a full set of contingent consumption claims, subject to endogenous constraints em-

anating from the limited enforcement of intertemporal contracts (as in Kehoe and Levine,

1993). Finally, we quantitatively evaluate, in the context of a calibrated general equilibrium

production economy, whether this setup, or alternatively a standard incomplete markets

model (as in Aiyagari,1994), can account for the documented stylized consumption inequal-

ity facts from the U.S.data.

Edited February 26, 2011 by Azazello1313

[wiegie]

I guess we could play dueling abstracts

we could play dueling abstracts, but note that the paper you cite is 5 years old while the paper I cite just came out last month... and the paper I cite explains why the methodology used in your paper is the wrong way to go about things.

Edited February 26, 2011 by wiegie

[yo mama]

we could play dueling abstracts, but note that the paper you cite is 5 years old while the paper I cite just came out last month... and the paper I cite explains why the methodology used in your paper is the wrong way to go about things.

Point - Wiegie

[Azazello1313]

we could play dueling abstracts, but note that the paper you cite is 5 years old while the paper I cite just came out last month... and the paper I cite explains why the methodology used in your paper is the wrong way to go about things.

 

they're reading the same data for essentially the same time frame, so I don't see that one paper being 5 years newer means all that much. perhaps krueger and perri will have some response?

 

in any case, the exact measure of consumption inequality seems a minor point in comparison with the marginal utility points (the $11K fridge versus the one for $300) in the editorial.

 

But consumption numbers, too, conceal as much as they illuminate. They can record only that we have spent, but not the value—the pleasure or health—gained in the spending. A stable trend in nominal consumption inequality can mask a narrowing of real or “utility-adjusted” consumption inequality. Indeed, according to happiness researchers, inequality in self-reported “life satisfaction” has been shrinking in wealthy market democracies, America included, suggesting that the quality of lives across the income scale are becoming more similar, not less.

...

This increasing equality in real consumption mirrors a dramatic narrowing of other inequalities between rich and poor, such as the inequalities in height, life expectancy and leisure. William Robert Fogel, a Nobel prize-winning economic historian, argues†† that nominal measures of economic well-being often miss such huge changes in the conditions of life. “In every measure that we have bearing on the standard of living...the gains of the lower classes have been far greater than those experienced by the population as a whole,” Mr Fogel observes.

[TimC]

After watching Spartacus, I wish the rich could enslave the poor. They did a few things in that show I'd like to try with my slaves.

[wiegie]

they're reading the same data for essentially the same time frame, so I don't see that one paper being 5 years newer means all that much.

my point was not that the data are newer, the point is that the methodology in the new paper is better than the methodology in the old paper.

 

And concerning the decrease in the inequality of happiness, if you look into it more you'll see that the major study in this area found that the decrease in happiness inequality occurred in the 1970s and 1980s--however in the last two decades happiness has started becoming more unequal again.

[SEC=UGA]

my point was not that the data are newer, the point is that the methodology in the new paper is better than the methodology in the old paper.

 

And concerning the decrease in the inequality of happiness, if you look into it more you'll see that the major study in this area found that the decrease in happiness inequality occurred in the 1970s and 1980s--however in the last two decades happiness has started becoming more unequal again.

 

How is that possible. You can get the same, if not better, 36" LCD TV that I bought 5 years ago for 2K for $399...

 

You can get the same 2002 Infinity Q-45 that I had for 6K.

 

Problem is, people just feel that if they don't have the newest, latest, and geatest toy that somehow the rich are getting one over on them.

 

I'm just ranting, leave me be.