Assessing the effect of economic inequality

The rise in income inequality over the past three decades has spawned a surge in research that examines the causes and consequences of this trend. Authors from a variety of disciplines have examined the impact of various measures of inequality on outcomes as diverse as mortality, health habits, self-reported health status, civic and voter participation, trust, marriage, crime, educational attainment, the size of local governments, self-reported happiness, and school spending. Regardless of the outcome, all research that tries to evaluate the causal impact of inequality empirically faces a common set of methodological issues. In this chapter, we attempt to catalog the most common of these issues and to describe how researchers have dealt with them. The topics we describe are by no means exhaustive, and because they are common issues, they will be familiar to many researchers.