Attanasio et al. Have a Potential Resolution of the Consumption Inequality Puzzle
For years now, the exciting field of inequality studies has been puzzled by a seeming inconsistency in the data. Income inequality is clearly going up. But consumption inequality — that is to say, the difference between how much rich people and poor people spend — isn’t.... [A] new paper by Orazio Attanasio, Erik Hurst and Luigi Pistaferri says we’ve got it all wrong: The data we were using is bad, and consumption inequality is going up alongside income inequality. The problem, says Erik Hurst, an economist at University of Chicago’s Booth School of Business, is that the main survey we’ve been using to track people’s spending habits — the Consumer Expenditure Survey — is breaking down...
