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

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

Authors

Publication date

26 Jul 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.

Links

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

Notes

Etheridge presenter


Related publications

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

    Mike Brewer, Ben Etheridge, and Cormac O'Dea

    1. Poverty
    2. Living Standards
    3. Household Economics
  2. Why are households that report the lowest incomes so well-off?

    Mike Brewer, Ben Etheridge, and Cormac O'Dea

    1. Poverty
    2. Living Standards
    3. Household Economics

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