Income Security Policy Paper No. 13

Recounting Winners and Losers in the 1980s: A Critique of Income Distribution Measurement Methodology

Richard V. Burkhauser, Amy D. Crews, and Mary C. Daly

August 1996 

Abstract:  The 1980s have been characterized as a time when the "rich got richer and the poor got poorer." Using a cross-over point methodology used in several recent studies, the paper shows how sensitive the measurement of winners and losers can be to seemingly small differences in methodological practice. Specifically, the paper shows sensitivity to the years compared, the income sharing unit chosen, and the inflation index used. Our results show that these and other studies of economic well-being exaggerate losses by mixing cyclical with cross-cycle effects.

A revised version of this paper was published in Economic Letters, 54(1997): 35-40. Those interested in this work should see that journal.