The Demography of Inequality from 1985 to 2010: Income and Consumption

David Johnson, U.S. Census Bureau
Jonathan Fisher, U.S. Census Bureau

Research indicates that economic inequality has increased in the United States. Researchers, however, dispute which resource -- income or consumption -- should be used to measure economic well-being. Using data from the Consumer Expenditure Survey from 1985 to 2010, we show that inequality increases for both measures over this period and, as expected, consumption inequality is lower than income inequality. Differing from other recent research, however, we find that the trends in income and consumption inequality are similar between 1985 and 2006, and diverge during the first few years of the Great Recession (between 2006 and 2010). In addition, we show that there are differential impacts on various demographic groups. Children are the only group whose distribution of consumption was relatively more unequal than the distribution of disposable income. The elderly fair much better than other groups using consumption, and men fair better than women under both measures.