The Distribution of U.S. Income and Food Expenditures

The Distribution of U.S. Income and Food Expenditures The Reagan years have been associated with the longest sustained peacetime economic expansion in our history. However, this expansion has not been without its critics. One frequent complaint is that current economic growth has favored higher income groups. Allegedly, wealthier members of society have been gaining an ever increasing share of total national income. This may have caused the distribution of income to become more and more unequal (Blackburn and Bloom 1987; Congressional Budget Office 1988; Ellwood and Levy 1988). While seldom voiced publicly, the strong relationship between food spending and income may imply that the distribution of food expenditures in this country has also become more unequal. Historically, food expenditures hold a prominent place in the United States as an indicator of household welfare. In fact, the percent of income spent on food was a pivotal variable in the construction of official U.S. poverty guidelines. Also, food spending continues to be the primary focus of many government programs, such as food stamps and school lunches. Despite the importance of food spending, study of intertemporal changes in the size distribution of food expenditures has been severely hampered by the lack of a nationally representative survey conducted on a continuous basis. Beginning in 1980, however, the Bureau of Labor Statistics (BLS) has been conducting a Continuing Consumer Expenditure Survey (CCES). With the release of the 1985 survey, six survey years of data are available. This presents a unique opportunity to examine simultaneously food expenditure and income distributions over a continuous time frame with nationally representative data. The primary purpose of this paper is to test for and to investigate any changes that may have occurred in both the income distribution and total food expenditure distribution. The empirical strategy is as follows. First, the null hypothesis that the distributions have not changed over time is tested. The alternative hypothesis includes all ways in which a distribution can change, such as by changes in means, variances, and asymmetries. Second, an interdistribution measure of relative economic affluence is estimated, and intradistribution inequality and the share of national food expenditures (income) received by income classes (i.e., asymmetry of the distributions and the manner in which this has changed) are examined. Third, the distributions are examined using the sociological theory of relative deprivation (Runciman 1966), and, finally, average propensities to spend for food are estimated. BACKGROUND In this study, analysis of income and food spending distributions differ in one important aspect. Studies of income distribution are concerned with the distribution of income across population units. The position taken here is that it is more insightful to study the distribution of food expenditures across income groups within a population than across population units per se (e.g., households or individuals). In other words, present interest centers on examining questions such as "How has the share of food expenditures of the poorest ten percent of the population changed?" To formalize the discussion, first assume that adult equivalent household income, Y, is randomly distributed with probability density function, f(y), and mean [mu].(1) The probability distribution function (PDF) of income is [Mathematical Expressions Omitted] and represents the proportion of households having adult equivalent income less than or equal to Y. The first moment distribution function (FMDF) of Y is [Mathematical Expressions Omitted] and represents the proportion of total adult equivalent incomes received by households having adult equivalent incomes less than or equal to Y. The relationship between F(Y) and [F. sub.1](Y) is called the Lorenz curve. …