Inequality, poverty and mobility: Choosing income or consumption as welfare indicators.

The economic literature has discussed at large about the best indicator of individual welfare: income or consumption. The implications of this choice are not only a matter for theoretical discussion but turn out to be very relevant for empirical analysis. Up to now, the debate has focused on the effects on distributional statics and avoided discussing or offering evidence of the effects on mobility or poverty dynamics. In this paper we discuss the strengths and weaknesses of both resource measurements and analyze the effects of the choice on distributional dynamics by presenting empirical evidence on Spain obtained from a rotating longitudinal survey.