A Democratic Measure of Household Income Growth: Theory and Application to the United Kingdom

Andrew Aitken () and Martin Weale ()

Economic Statistics Centre of Excellence (ESCoE) Discussion Papers from Economic Statistics Centre of Excellence (ESCoE)

Abstract: This paper develops a price and quantity system of indicators structured round Atkinson's concept of inequality aversion. A democratic indicator of income growth, weighting each household's growth experience equally, is shown to result when Prais' democratic price index is used to deflate the geometric mean of equivalised household income. A welfare interpretation of the democratic indicator of income growth is provided and it is shown that, with heterogeneous but homothetic preferences, the deflator can serve as a common scaling social cost of living index when applied to income as well as to consumption. Application to United Kingdom household data suggests that, over the interval 2005/6-2015/6 democratic real equivalised household income grew by 0.20 per cent per annum while the plutocratic equivalent grew by 0.52 per cent per annum.

Keywords: Real Income; Inequality Aversion; Welfare Indicator; Cost of Living (search for similar items in EconPapers)
JEL-codes: D12 E21 I31 (search for similar items in EconPapers)
Date: 2018-02
New Economics Papers: this item is included in nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://escoe-website.s3.amazonaws.com/wp-content/ ... ESCoE-DP-2018-02.pdf

Related works:
Journal Article: A Democratic Measure of Household Income Growth: Theory and Application to the United Kingdom (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nsr:escoed:escoe-dp-2018-02

Access Statistics for this paper

More papers in Economic Statistics Centre of Excellence (ESCoE) Discussion Papers from Economic Statistics Centre of Excellence (ESCoE) King's College London Strand London WC2R 2LS. Contact information at EDIRC.
Bibliographic data for series maintained by ESCoE Centre Manager ().