Alternative Income Measures Research Articles

The Affordable Care Act Reduced Income Inequality In The US.

Income inequality estimates based on traditional poverty measures do not capture the effects of health care spending and health insurance. To explore the distributional effects of the Affordable Care Act's (ACA's) expansion of health benefits and the resulting income inequality, this study used alternative income measures that incorporate the value of the ACA's health insurance changes under the law. The study simulated the impact of the ACA on income inequality in 2019 compared with a scenario without the ACA. We found that the ACA reduced income inequality and that the decrease was much larger in states that expanded Medicaid than in states that did not. We also decomposed the effect of the ACA on inequality by race/ethnicity, age, and family educational attainment. The ACA reduced inequality both across groups and within these groups. With efforts to repeal the ACA-specifically, California v. Texas-having shifted from Congress to the courts, it remains important to consider the consequences of fully repealing the ACA, which would likely reverse reduced inequality observed under the law.

Factors affecting delinquency of household credit in the U.S.: Does consumer sentiment play a role?

In this study, we provide both theoretical and empirical evidence on the determinants of household loan delinquency for home ownership, credit card and auto loans for the U.S. states in a panel framework over a period from 2003 through 2017. In particular, we examine the impact of consumer sentiments on loan delinquency rates. We show that improved current consumer sentiment significantly induce lower mortgage, credit card and automobile loan defaults in the American states subdivided into four different regions. We also find that the higher overall and expected consumer sentiment raise loan delinquencies. Implicit in this finding is the apparently excessive and inappropriate expansion of loans in the U.S. economy in the face of consumers’ optimism, which in turn, provides an intuitive understanding of the circumstances that could precede a depression or outbreak of anomalies in the financial sector. Our general findings further exhibit significant positive effect of unemployment rate and mostly adverse effect of per capita income on mortgage and automobile loan delinquency rates. The results provide some compelling evidence with regard to the effect of consumer confidence on household credit delinquency rates across various states in the U.S. and are robust to alternative measures of income and mortgage rates.

Do Rich Parents Enjoy Children Less?

We investigate the role of individual labor income as a moderator of parental subjective well-being trajectories before and after first childbirth for couples living in Germany. Analyzing German Socio-economic Panel Survey data, we found that income matters negatively for parental subjective well-being after childbirth, though with important differences by education and gender. In particular, among better educated parents, the richer see the arrival of a child more negatively. Parental income is measured by the average of individual labor income within three years before the birth, the individual labor income at three years from the event, and the equivalent household income. In this way, we provide evidence that results are robust to potential endogeneity between income and childbirth, and for alternative measures of income. Results are discussed in terms of preferences among different groups of parents, and work and family balance.

Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income

Recent research on levels and trends in the United States in income inequality vary substantially in how they measure income. We show the sensitivity of alternative income measures in capturing income trends using a unified data set. Focusing solely on market income or including realized taxable capital gains based on IRS tax return data in more comprehensive household income measures will dramatically increase inequality growth compared to capital gains measures more in keeping with Haig-Simons principles. Using a measure of yearly accrued capital gains dramatically reduces observed growth in income inequality across the distribution, but also equalizes income growth since 1989.

The Causal Effect of Family Income on Child Health: A Re-Examination Using an Instrumental Variables Approach

Despite a recent growth in studies examining the association between family income and child health, very few studies investigate whether this is a causal relationship. This paper addresses this major methodological gap and examines the causal effect of family income on child health in the UK. Using rich observational data from a British cohort study, we exploit exogenous variation in local labour market characteristics to instrument for family income. We estimate the effect of family income on subjective child health and control for potential transmission channels through which income could affect child health. The results from our models provide novel evidence that income has a small but significant causal effect on subjective child health. Moreover, the analysis shows that parental health does not drive a spurious relationship between family income and child health as argued in recent contributions. We do not find significant effects of family income on chronic indicators of child health. The results are robust to different sets of instrumental variables, and to alternative measures of income.

Assessing the distributional impact of reforms to disability benefits for older people in the UK: implications of alternative measures of income and disability costs

ABSTRACTThe UK Attendance Allowance (AA) and Disability Living Allowance (DLA) are non-means-tested benefits paid to many disabled people aged 65 + . They may also increase entitlements to means-tested benefits through the Severe Disability Premium (SDP). We investigate proposed reforms involving withdrawal of AA/DLA. Despite their present non-means-tested nature, we show that withdrawal would affect mainly low-income people, whose losses could be mitigated if SDP were retained at its current or a higher level. We also show the importance of the method of describing distributional impacts and that use of inappropriate income definitions in official reports has overstated recipients' capacity to absorb the loss of these benefits.

Impressionistic realism: The Europeans focus the U.S. on measurement

At the Joint OECD/University of Maryland Conference held in Paris on “Measuring Poverty, Income Inequality, and Social Exclusion: Lessons from Europe,” many of the conference papers focused on alternative measures of income, evaluating their impacts on inequality and poverty. The conference papers highlight the impact of making detailed changes that affect measurement. These details, in turn, provide insight for the larger context of determining the “best” resource measure to use for poverty and inequality measurement. In many cases, the details do not change our picture of the trend in poverty, or even the comparisons across countries (see OECD, 2008), but they often change the composition of the poor. Examining the details helps to logically connect the parts to form a satisfactory whole or picture. As it is often difficult to clarify all of the details and obtain the “best” measure, the main focus should be on obtaining a sufficient statistic that reflects a country’s poverty or inequality and that can be compared over time and across countries. To evaluate how the logical connection of parts affect the overall picture of poverty, one must answer the Who, What, Where, When, Why, and How of poverty measurement: Who is the unit of analysis (and the choice of equivalence scale); What resource measure will be used; Where is poverty measured (and does it differ by geographic location); When is poverty measured (and does it change over time); Why is poverty measured and what is the purpose; How is the poverty threshold constructed and used?

The Long-Lived Effects of Historic Climate on the Wealth of Nations

We investigate the long-run consequences of historic, climatic temperatures (1730-2000) for the modern cross-country income distribution. Using a newly constructed dataset of climatic temperatures stretching over three centuries (18th, 19th, and 20th), we estimate a robust and significant time-varying, non-monotonic effect of climatic temperature upon current incomes for a cross-section of 167 countries. We find a large, positive effect of 18th century climatic temperature and an even larger, negative effect of 19th century climatic temperature upon current incomes. When historic, climatic temperature is introduced, the effect of 20th century climatic temperature on current income is either weakly positive or insignificant. Our findings are robust to various sub-samples, additional geographic controls, and alternative income measures. The negative relationship between current, climatic temperature and current income that is commonly estimated appears to reflect the long-run effect of climatic variations in the 18th and 19th centuries.

Dispersion in Industry Price Changes and the Relative Association between Alternative Income Measures and Security Returns: Professional Adaptation

Dispersion in Industry Price Changes and the Relative Association between Alternative Income Measures and Security Returns: Professional Adaptation

Dispersion in Industry Price Changes and the Relative Association between Alternative Income Measures and Security Returns

The objective of this research is to assess whether the incremental information content of current cost (CC) income and constant dollar (CD) income is time-period specific. Based on work by Lim and Sunder (1990), we predict that CC (CD) income is more likely to exhibit incremental information content over CD (CC) income when the dispersion in annual price changes across industries is large (small). Evidence provided using FASB Statement No. 33 data is consistent with these predictions. That is, CD (CC) income is shown to exhibit incremental information content over CC (CD) income in the years 1980 and 1983 (1981 and 1982). We then extend this analysis to a disclosure environment that includes historical cost (HC) income, and find that CD (CC) income also has incremental information content over HC income in those same years—1980 and 1983 (1981 and 1982). Thus, by identifying time periods when either CC income or CD income is the preferred income measure, we also are able to provide sample-wide evidence that accounting data adjusted for changing prices of productive assets provide incremental information over HC income.

Interaction between alternative income measures: Effects on the significance of market association tests

This study examines the incremental information content of current cost operating income over historical cost operating income. The model used to test for incremental information content incorporates interaction effects between these two measures of income, thus explicitly recognizing any complementary or substitution effects that may exist between current cost operating income and historical cost operating income. The empirical results indicate that current cost operating income has significant incremental information content over historical cost operating income. Second, the interaction variables are significant, indicating that the model is better specified with the inclusion of interaction terms. Third, the signs of the coefficients of the interaction variables indicate that current cost operating income and historical cost operating income are substitutes for one another.

INTEREST, DISTRIBUTION OF VALUE ADDED AND INFLATION: INFLATION‐INDUCED DIFFICULTIES IN THE INTERPRETATION OF DUTCH NATIONAL ACCOUNTS*

The present paper examines the inflationary bias of sectoral income transactions in national accounting data. An inconsistency of these data is pointed out. Alternative income measures are estimated by adjusting the standard national accounting data for inflationary gains and losses. These gains and losses arise from financing by loan capital. Several issues concerning income concepts and alternative methods for the measurement of inflationary gains and losses are discussed. It is concluded that an adjustment of sectoral income data for these gains and losses produces a very different picture of the sectoral distribution of income.

The Impact of Demographic Variables on Expenditures for Food Away from Home

Whereas considerable effort has been expended in prior research in discussing the appropriateness of alternative measures of income in expenditure studies, this paper looks in depth at the impact of incorporating a broad range of demographic variables in the expenditure analysis. Food expenditures away from home are used to analyze the additional gains in explanatory power and the impact of demographic variables on income elasticities. Considerable divergence of results is found under the alternative measures of income.

Aspects of poverty in Rural India

Much of the earlier work on poverty in Rural India has been exclusively concerned with a limited measure of poverty—the number of people below a poverty line usually specified in terms of per capita expenditure. An attempt is made here to provide a mapping of poverty using actual income/expenditure as well as alternative measures of income which ‘standardize’ actual income/expenditure for differences in household composition. A comprehensive index of poverty—the Sen-index which combines aspects of both ‘absolute’ and ‘relative’ deprivation—is computed for temporal comparisons. A profile of the poor focusing on their household characteristics is presented to serve as a basis for understanding some of the underlying causal mechanisms of poverty. Finally, some results are presented to illustrate (1) that poverty is virtually a permanent condition for the bulk of the poor; and (2) that large groups of households—especially those with a high dependency burden—sink to abysmally low levels of living.