1. IntroductionRecent international comparisons of economic well-being that have focused on individuals and households have two characteristics. First, perhaps because of the availability of data, household1 income has been most frequently used as the proxy for household economic well-being. Second, most studies have concentrated on income inequality comparisons.2 An important finding from these international studies is that, during the late 1980s and early 1990s, the United States had the least equal distribution of household income among all industrialized countries (Atkinson, Rainwater, and Smeeding 1995; Gottschalk and Smeeding 1997, 2000).Slesnick (1991, 1993), however, pointed out that, ideally, we should characterize economic well-being in terms of commodity consumption. Without entering the discussion of income versus consumption as proxies of economic well-being, it is fair to say that both deserve investigation. The important fact in this respect is that, for the United States, the consequences of using consumption-based measures have been dramatic. First, the level and trend of Slesnick's (1991) series of aggregate total expenditures from 1949-1989 differed substantially from those of before-tax income. Second, the substitution of total expenditures for income usually results in lower estimated poverty rates (Slesnick 1993; Garner, Johnson, and Kokoski 1996). Third, the distribution of household expenditures is substantially more equal than the distribution of income in the United States (Johnson and Shipp 1997).3To examine whether results of consumption-based studies of household economic well-being provide the same ranking of countries as those based on income, international comparisons are needed. Such studies are not easy to conduct because, unlike for income,4 there is no data source for which consumption expenditure data have been made comparable across countries. However, when microhousehold expenditure data are available to researchers, such comparisons are possible. This is the case in the present article, where the availability of household expenditure data for Spain and the United States presents us with a rare occasion to deal with the problems that plague international comparisons.The comparison between Spain and the United States is also interesting for two additional reasons. First, as far as recent trends are concerned, inequality increased in the United States during the 1980s, regardless of the measure of well-being considered. However, the change in consumption-based inequality was smaller than the change in income inequality when using household expenditure survey data (Cutler and Katz 1992; Johnson and Shipp 1997). In contrast, over a similar period (1973-1974 to 1990-1991), household expenditure and income inequality fell in Spain (Ruiz-Castillo 1995; Del Rio and Ruiz-Castillo 2001a, b). However, like for the United States, the change was greater for income inequality than for expenditure inequality in Spain (Alvarez Aledo et al. 1996).Second, using microdata from household budget surveys, it has been found that in Spain, as in Portugal and the United Kingdom, income inequality is less than expenditure inequality.5 General economic intuition would suggest that the greater prevalence of transitory components in current income, relative to current expenditures, should lead to greater income than expenditure inequality, which was reported earlier for the United States. These conflicting results raise questions about previous international comparisons based on current population survey income data for the United States and income data from household budget surveys for Portugal, Spain, and the United Kingdom. In particular, according to Gottschalk and Smeeding (1997), income inequality was less in Spain than in the United States during the earlier 1990s. Whether this ranking remains the same when expenditure inequalities are compared is one of the questions addressed here. …
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Jan 3, 2023
Philip Giurlando 
Open Access
