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Why are households that report the lowest incomes so well-off

Brewer, M and Etheridge, BS and O'Dea, C (2017) 'Why are households that report the lowest incomes so well-off.' The Economic Journal, 127 (605). F24 - F49. ISSN 0013-0133

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Abstract

We document that households in the UK with extremely low measured income tend to spend much more than those with merely moderately low income. This phenomenon is evident throughout three decades worth of microdata and across different employment states, levels of education and marital statuses. Of the likely explanations, we provide several arguments that discount over-reporting of expenditure and argue that under-reporting of income plays the major role. In particular, by using a dynamic model of consumption and saving, and paying special attention to poverty dynamics, we show that consumption smoothing cannot explain all the apparent dissaving.

Item Type: Article
Uncontrolled Keywords: Consumption, Measuring living standards, Poverty
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Faculty of Social Sciences > Institute for Social and Economic Research
Depositing User: Jim Jamieson
Date Deposited: 14 Sep 2015 14:01
Last Modified: 18 Dec 2018 12:15
URI: http://repository.essex.ac.uk/id/eprint/14894

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