Why are households that report the lowest incomes so well-off?

Publication type

Conference Paper

Series

Understanding Society Research Conference, 24-26 July 2013, University of Essex

Authors

Publication date

July 26, 2013

Abstract:

Using data from the Living Costs and Food Survey in the UK over 1978-2009 we document that households with extremely low measured income (below 10% of median income) on average spend much more than those with merely moderately low income (those below 50% of median income): in short, the graph of median expenditure against income maps out a `tick’. We show that this tick appears, to a greater or lesser extent, over the whole period and across different employment states, levels of education and marital statuses. Of the likely explanations, we provide several arguments that discount over-reporting of expenditure and argue that under-reporting of income plays the major role. In particular, by using a dynamic model of consumption and saving, and paying special attention to poverty dynamics, we show that consumption smoothing cannot explain all the apparent dissaving. Finally, and whatever the reason for the tick, we document that low consumption is better correlated with other measures of living standards than having low income.

Link

https://www.understandingsociety.ac.uk/research-conference-2013/papers/16

Notes

Etheridge presenter


Related Publications

#521749

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest