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

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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.

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Authors and Affiliations

  1. Department of Economics, New York University, 19 West 4th St., 6th Floor, New York, NY, 10003, USA

    Edward N. Wolff

  2. Levy Economics Institute, Bard College, Annandale-on-Hudson, NY, 12504, USA

    Ajit Zacharias

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  1. Edward N. Wolff
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  2. Ajit Zacharias
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Correspondence to Edward N. Wolff.

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Wolff, E.N., Zacharias, A. Household wealth and the measurement of economic well-being in the United States. J Econ Inequal 7, 83–115 (2009). https://doi.org/10.1007/s10888-007-9068-6

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  • DOI: https://doi.org/10.1007/s10888-007-9068-6

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