Capitol Report: Why the story of widening inequality may be wildly misleading

The story of the rich getting richer and the poor getting poorer is a common one that’s made authors like Thomas Piketty a household name.

But a new study suggests researchers may be looking at the wrong metric — and that inequality really isn’t widening much at all.

Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame argue that consumption, rather than income, should be examined. Using income to measure inequality is a problem for a few reasons. For one, it’s measured before tax, it’s not person weighted (a family with one person is measured the same as one with six people) and it may underrepresent the impact of government transfers.

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