Inequality deniers claim that income inequality metrics exaggerate inequality because consumption inequality has decreased. In other words, the poor have refrigerators so things aren’t as bad as some think. (Sorry about the sarcasm.)
What does the evidence say?
Research by Attanasio, Hurst and Pistaferri (2012) discredits the hypothesis that the increase in income inequality was offset by an equally large increase in consumption equality. Attanasio et al. utilized data from the Panel Study of Income Dynamics. Based on various methods they found each methodology yielded similar outcomes:
“…consumption inequality within the U.S. between 1980 and 2010 has increased by nearly the same amount as income inequality.”
Correlations between income inequality and consumption inequality were found , depending on the methodology utilized, to be .69 and .88 and income and consumption inequality tracked each other nearly identically during this time period, 1980-2010.
Attanasio, Orazio, Hurst, Erik, & Pistaferri, Luigi. (2012). The Evolution of Income, Consumption, and Leisure Inequality in The US, 1980-2010. National Bureau of Economic Research. NBER Working Paper No. 17982