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Trends In Inequality Using Consumer Expenditures: 1960 To 1993

David S. Johnson and Stephanie S. Shipp


Although inequality of income has historically been the predominant measure of well-being, recently there has been a movement to expand consideration of well-being to include the distribution of consumption (Slesnick (1993), Cutler and Katz (1991)). In this paper, we examine inequality over time using consumption-expenditure data from the U.S. Consumer Expenditure (CE) Survey. Changes in the demographic characteristics of families are examined to determine their effect on the inequality of consumer expenditures. Using data from the CE Survey, various measures of inequality indices are examined for five time periods: 1960-61, 1972-73, 1980-81, 1989-90, and 1992-93. Our indices indicate that inequality for individuals was fairly constant between 1960-61 and 1972-73, rose between 1972-73 and 1980-81, widened considerably between 1980-81 and 1989-90, and fell during the early 1990's. The mean log deviation inequality measure is then decomposed by demographic characteristics (family type and education). The main finding of this decomposition is that most of the inequality is due to within-group rather than between-group inequality and that within-group inequality increased over the 30 year period.