Inequality in 3-D: Income, Consumption, and Wealth

50 Pages Posted: 8 Jan 2018

See all articles by Jonathan Fisher

Jonathan Fisher

Stanford University - Stanford Center on Poverty & Inequality

David Johnson

University of Michigan at Ann Arbor

Timothy M. Smeeding

University of Wisconsin - Madison

Jeffrey P. Thompson

New England Public Policy Institute, Federal Reserve Bank of Boston; Federal Reserve Board of Governors

Date Written: 2018-01-02

Abstract

We do not need to and should not have to choose amongst income, consumption, or wealth as the superior measure of well-being. All three individually and jointly determine well-being. We are the first to study inequality in three conjoint dimensions for the same households, using income, consumption, and wealth from the 1989-2016 Surveys of Consumer Finances (SCF). The paper focuses on two questions. What does inequality in two and three dimensions look like? Has inequality in multiple dimensions increased by less, by more, or by about the same as inequality in any one dimension? We find an increase in inequality in two dimensions and in three dimensions, with a faster increase in multi-dimensional inequality than in one-dimensional inequality. Viewing inequality through one dimension greatly understates the level and the growth in inequality in two and three dimensions. The U.S. is becoming more economically unequal than is generally understood.

Keywords: Inequality, Wealth, Consumption

JEL Classification: D31, E21, I31

Suggested Citation

Fisher, Jonathan and Johnson, David and Smeeding, Timothy M. and Thompson, Jeffrey P., Inequality in 3-D: Income, Consumption, and Wealth (2018-01-02). FEDS Working Paper No. 2018-001. Available at SSRN: https://ssrn.com/abstract=3097391 or http://dx.doi.org/10.17016/FEDS.2018.001

Jonathan Fisher (Contact Author)

Stanford University - Stanford Center on Poverty & Inequality ( email )

450 Serra Mall, Building 80
Stanford, CA 94305-7208
United States

David Johnson

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Timothy M. Smeeding

University of Wisconsin - Madison ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-890-1317 (Phone)
608-265-3119 (Fax)

HOME PAGE: http://www.lafollette.wisc.edu/facultystaff/smeeding-timothy.html

Jeffrey P. Thompson

New England Public Policy Institute, Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Federal Reserve Board of Governors ( email )

Washington, DC 20551
United States

HOME PAGE: http://https://www.federalreserve.gov/econres/jeffrey-p-thompson.htm

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