QED Working Paper Number

A method to impute consumption expenditure inequality between wealth groups in the Survey of Consumer Finances is provided, allowing for measurement error that is correlated with income and wealth. Identification is derived from observing food at home and away, which are relative necessities and luxuries, respectively. The gap in expenditure between top and bottom wealth quintiles increased by 50% between 2004 and 2013, indicating that increases in wealth inequality have passed through to consumption.

JEL Codes
Inequality, Wealth, Income, Consumption
Working Paper