Trends in the Level and Distribution of U.S. Living Standards: 1973-1993

Various measures of the improvement in U.S. living standards provide contrasting pictures of the pace of overall economic progress. Per capita consumption rose 37 percent from 1973 to 1993, but median family income was unchanged. This paper accounts for the striking divergence between these alternative measures. Average consumption rose faster than median cash income because saving fell, consumption financed from noncash income sources rose, family size shrank, and income inequality climbed sharply. The paper documents the importance of rising wage inequality and the surprising increase in the correlation between husband and wife earnings in the trend toward greater family income inequality.