Consumption and Economic Well-Being at Older Ages

As society faces difficult choices about allocating its resources among different age groups, measuring each group’s needs accurately is imperative. Consumption is a much more direct measure of economic well-being than income; yet income is almost universally used to measure well-being in practice. Differences between the two measures are particularly significant when assessing the relative economic status of the elderly because the elderly population tends to face lower tax rates and can finance part of its consumption from savings. This project will use new data from the Consumption and Activities Mail Survey to compare economic well-being as measured by consumption with well-being as measured by income.