Consumption and Income Inequality in the United States since the 1960s

Recent research concludes that the rise in consumption inequality mirrors, or even exceeds, the rise in income inequality. We revisit this finding, constructing improved measures of consumption, focusing on its well-measured components that are reported at a high and stable rate relative to national accounts. While overall income inequality rose over the past 5 decades, the rise in overall consumption inequality was small. The declining quality of income data likely contributes to these differences for the bottom of the distribution. Asset price changes likely account for some of the differences in recent years for the top of the distribution.