Household wealth and the measurement of economic well-being in the United States

Edward N. Wolff, Ajit Zacharias

    Research output: Contribution to journalArticlepeer-review

    Abstract

    We analyze the level and distribution of economic well-being in the United States during the 1980s and 1990s based on the standard measure of money income and a measure in which income from wealth is calculated as the sum of lifetime annuity from nonhome wealth and imputed rental-equivalent for owner-occupied homes. Over the 1982-2000 period, median well-being increases faster when these adjustments are made than when standard money income is used. This adjustment also widens the income gap between African-Americans and whites but increases the relative well-being of the elderly. Adding imputed rent and annuities from household wealth to household income considerably increases measured inequality and the share of income from wealth in inequality. However, both measures show about the same rise in inequality over the period. We also find an increasing share of wage and salary income in our expanded definition of income among the richest 1% over the period but do not find that the "working rich" have largely replaced rentiers at the top of the economic ladder.

    Original languageEnglish (US)
    Pages (from-to)83-115
    Number of pages33
    JournalJournal of Economic Inequality
    Volume7
    Issue number2
    DOIs
    StatePublished - 2009

    Keywords

    • Household wealth
    • Inequality
    • Living standards

    ASJC Scopus subject areas

    • Sociology and Political Science
    • Economics, Econometrics and Finance(all)
    • Organizational Behavior and Human Resource Management

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