Measuring and Comparing Consumption Inequality between France and the United States

Abstract

This paper constructs an annual dataset of consumption by income quintiles for France since 1989 in order to make a granular comparison of consumption inequality with the United States. First, we match consumption data from a survey run every five years with the national accounts, and then use a Kalman filter to interpolate missing observations, leveraging the yearly national accounts data to improve the performance of the Kalman filter. We validate this technique by applying it to a US dataset with pseudo-missing data comparable with our French data. Second, we construct a US consumption dataset compatible with the French classification of consumption items and compare consumption inequality trends between the US and France. We find consumption inequality to be overall lower than income inequality, and not to follow the dynamics of income inequality. Consumption inequality is also higher in the US than in France. Finally, based on the weights of the different consumption items, we construct annual consumption deflators by quintiles. We find that dispersion in price pressures across income groups is less marked in France than in the United States, and overall quite small in both countries.

Keywords: Inequality, Consumption, Income, Inflation

JEL Classification: D31, E21, E31