As we near the close of the twentieth century, communist regimes have collapsed and the productivity of capitalism is universally acclaimed. In all the Western democracies, welfare state institutions are being challenged. The challenge is, arguably, the most fundamental in the United States. Proposals to privatize public education and oldage insurance are now mainstream. The 1996 Personal Responsibility and Work Opportunities Reconciliation Act represents the most recent, and is likely to be the most influential, change in public policy for the poor. By eliminating the historical entitlement to welfare, and devolving responsibility for welfare programs to the states, the Personal Responsibility Act dramatically changes the nature, level, and locus of government responsibility for the poor. Other policy changes-such as the creation of the Children's Health Insurance Program and Child Care and Development Block Grant-have expanded resources and state-level discretion for the provision of support. Supporters of the retrenchment and devolution of federal programs predict that these changes will improve the fortunes of the most disadvantaged Americans and help close the growing gap between the rich and the poor. Critics predict that these same changes will harm the poor and increase inequality. The disagreement stems, in part, from different expectations about the intermediate impact of devolution on government, community, and family systems. Some observers argue that government has displaced support from the family, community, and voluntary sectors; they expect government retrenchment to enhance the capacity and contribution from these nongovernmental systems. Others argue that government has a unique capacity to support disadvantaged populations and to promote greater equality in economic and social outcomes; they fear that government retrenchment will create a level of need that will overwhelm private systems and force individuals to turn to unreliable and unacceptable alternatives. Efforts to confirm or disprove predictions such as these are creating new opportunities, along with new challenges, for scholars who are interested in questions about economic security and equality. New opportunities are arising with the natural experiments that are created as state and local governments revise, redesign, and reduce a variety of income assistance and social service programs. New challenges are arising as analysts attempt to track the rapidly changing policy landscape and collect data with which to evaluate the impact of the changes. The New York City Social Indicators Survey (SIS) project represents one effort to track the consequences of policy and devolution for inequality and well-being in the largest and most diverse city in the United States. The project uses a telephone survey to collect data from a repeated cross-sectional sample of the entire city population. The survey will collect detailed information on families' economic resources, assets, external support, and health and well-being. By analyzing these data by population and over time, we hope to address questions that are at the core of current debates about inequality in the United States: How great is inequality? Does income inequality exaggerate, or reflect, inequality in material and social living conditions, health, and well-being? Is inequality on these dimensions growing or shrinking? And what effect have devolution and social policy reform had on the magnitude of income and other forms of inequality? In the following sections, we present first-year findings from the project. We begin with an overview of the issues that motivated the project and a brief summary of our measures and data-collection methods. The next sections use data collected in 1997 to tell the story of income and outcome inequality in the city-first, in terms of comparisons between the well-being of New Yorkers and the rest of the U.S. population; second, in terms of the well-being of poor and economically secure residents of the city. …