How Much Inequality Is There?

Diana Furchtgott-Roth argues that the most accurate measure of well-being is per capita consumption, or spending:

The average annual spending for a household in the lowest quintile [in 2009] was…$12,712 per person. In contrast, the average spending for a household in the top quintile was…$30,401 per person…

Differences in per-person spending from the lowest income fifth to the highest are not dramatically different from 20 years ago…

But compared with 1989, the big winners are the lowest-income group, which spent 9.1% more per person in constant dollars. In contrast, the highest group spent 2.6% more, and the middle group increased its spending by 1.1%.

Comments (10)

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  1. Ken says:

    Nice post. It’s good to keep things in perspective.

  2. Tom H. says:

    Good point. When people are consuming their own income, they are the principal beneficiaries. When they save and invest, everybody else benefits.

  3. artk says:

    Complete BS. Sanford Bernstein & Co. did an analysis of the bottom two income quintiles. After food, shelter and housing, those households have about $100 a month left over for everything, health care, education, everything. And that was based on 2008 statistics, the current downturn has made that worse. The perspective is that 40% of the country has nothing to save or invest.

  4. Tom says:

    Yeah I have to ask- are you saying that things are worse for the rich and better for the poor? Because then I’d have to side with art. Americans waste their money on things they don’t need, but this seems like a stretch.

  5. Bruce says:

    I’m not understanding either artk or Tom. What’s the problem? Diana is saying that consumption differences are much more narrow than income differences. I might add that know one really knows how to accurately measure the income differences, because so much of the income of the rich is in the form of unrealized capital gains.

  6. Devon Herrick says:

    In a consumer society, it is not hard to understand why the poor have increased their wellbeing even more than the middle class. The poor have access to the cast-off goods from higher-income households (many of which are very nice). They also have access to a wide range of low-priced goods to fit their budget. With housing allowances, WIC, Medicaid, food stamps, and a near-absence of income taxes, the poor are heavily subsidized by society in various ways. Even the poorest households have access to amenities that would have been unheard of only a few years ago.

    The U.S. does not have the extensive social safety net as is common in Europe. Yet, a significant number of poor people from around the world seem eager to move here. That is a testament to the fact that the United States is the best country in the world in which to be poor.

  7. Tom says:


    The problem is that John is implying that the poor aren’t as poor and the rich aren’t as rich as they seem. This contradicts Americans’ perception that the rich are richer than ever while the middle class is shrinking as more and more people fall on hard times.

    Numbers won’t change people’s anger at the rich right now, but best of luck if you want to try.

  8. Neil H. says:

    Tom, during a recession like the one we have been experiencing, the income of the rich falls more than everyone else’s income, on the average.

    That’s because the income of the rich is primarily capital income.

  9. Tom says:

    Sure Neil, but nobody is choking back tears for these people.

    Wake up and smell the revulsion.

  10. Don Levit says:

    According to a recent article, the top 10% of families own an average of $700,000 in stocks; the next 15% own an average of $53,000.
    I wonder what the bottom 75% own?
    It’s not what you spend that counts; it’s what you save.
    Go to:
    Do you think these figures are accurate?
    Don Levit