Consumption dynamics and inequality

Our research in this area looks both at how much households save, spend and borrow at different stages in the life cycle, and how these decisions feed into inequalities in consumption both cross-sectionally and dynamically. A greater understanding of how consumers allocate their spending over time can help answer questions about how consumption and saving will respond to changes in household circumstances, as well as the degree to which consumers bring forward or postpone purchases in response to changes in interest rates and taxes.

Journal Article | Quarterly Journal of Economics
This paper places the debate over using consumption or income in studies of inequality growth in a formal intertemporal setting. It highlights the importance of permanent and transitory income uncertainty in the evaluation of growth in consumption inequality.

Contacts

Contact IFS on 020 7291 4800 or mailbox@ifs.org.uk

Peter Levell

Peter Levell

Senior Research Economist

Martin O'Connell

Martin O'Connell

Associate Director