Summary of Inequality in 3-D

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Inequality in 3-D summary
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Economists and politicians sound an increasingly loud alarm about growing income inequality in the advanced countries, particularly in the United States. Yet household income gaps are just one facet of overall “economic inequality,” which also includes differences in individuals’ consumption and wealth. Economists Jonathan Fisher, David Johnson, Timothy Smeeding and Jeffrey Thompson take a new approach in assessing people’s overall economic well-being. This scholarly report for analysts and policy experts highlights a trajectory of rising inequality.

In this summary, you will learn

  • Why three-dimensional models of income, wealth and consumption are the best measures of “economic inequality” and
  • What economic inequality looks like in the United States.
 

About the Authors

The authors are economists at Stanford University, the University of Michigan, the University of Wisconsin and the Federal Reserve Board of Governors.

 

Summary

While growth has returned to the US economy after the Great Recession, one area that has not seen improvement, but rather experienced regression, was income inequality. Wage disparities are a serious issue, but economically important discrepancies also occur in households’ net worth and their “total spending on goods and services for current consumption.” The three aspects of income, wealth and consumption together can provide the fullest understanding of a country’s economic security. Indicators of how these factors interact...


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