Working, consuming, and dying: Quantifying the diversity in the american experience

Abstract

We document how lifetime utility varies by demographic groups in the US and how these differences have evolved since the start of the 21st century. Using the equivalent variation as our measure of welfare we find that the standard deviation in cross-sectional well-being between demographic groups is comparable to the standard deviation of relative annual income in prime earning years and double the standard deviation of relative consumption. Our metric includes consumption, leisure, and mortality risk. The results are primarily driven by differences in consumption and life expectancy. Controlling for other demographics, welfare is increasing in educational attainment and is higher for women and those of Asian descent. This qualitative ordering is robust to classifying a broad measure of home production and child care as work and various definitions of real consumption. Finally, we show that changes in mortality rates associated with ‘deaths of despair’ disproportionately lower the welfare of less educated Whites.