Net Government Expenditures and the Economic Well-Being of the Elderly in the United States, 1989-2001

Levy Economics Institute Working Paper No. 466

53 Pages Posted: 9 Aug 2006

See all articles by Ajit Zacharias

Ajit Zacharias

Bard College - Levy Economics Institute

Hyunsub Kum

Bard College - Levy Economics Institute; Seoul National University; University of Texas at Austin

Edward N. Wolff

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER); Bard College - Levy Economics Institute

Date Written: August 2006

Abstract

We examine the economic well-being of the elderly, using the Levy Institute Measure of Economic Well-Being (LIMEW). Compared to the conventional measures of income, the LIMEW is a comprehensive measure that incorporates broader definitions of income from wealth, government expenditures, and taxes. It also includes the value of household production. We find that the elderly are much better off, relative to the nonelderly, according to our broader measure of economic well-being than by conventional income measures. The main reason for the higher relative LIMEW of the elderly is the much higher values of income from wealth and net government expenditures for the elderly than the nonelderly. There are pronounced differences in well-being among the population subgroups within the elderly. The older elderly are worse off than the younger elderly, nonwhites are worse off than whites, and singles are worse off than married couples. We also find that the degree of inequality in the LIMEW is substantially higher among the elderly than among the nonelderly. In contrast, inequality in the most comprehensive measure of income published by the Census Bureau is virtually identical among the elderly and nonelderly. The main factor behind the degree of inequality, as the decomposition analysis reveals, is the greater size and concentration of income from nonhome wealth in the LIMEW compared to extended income (EI).

Keywords: economic well-being, living standards, inequality

JEL Classification: D31, J14, I31

Suggested Citation

Zacharias, Ajit and Kum, Hyunsub and Kum, Hyunsub and Wolff, Edward N., Net Government Expenditures and the Economic Well-Being of the Elderly in the United States, 1989-2001 (August 2006). Levy Economics Institute Working Paper No. 466, Available at SSRN: https://ssrn.com/abstract=923097 or http://dx.doi.org/10.2139/ssrn.923097

Ajit Zacharias (Contact Author)

Bard College - Levy Economics Institute ( email )

Blithewood
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United States
845-758-7734 (Phone)
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HOME PAGE: http://www.levy.org

Hyunsub Kum

Bard College - Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

Seoul National University ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

University of Texas at Austin ( email )

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United States

Edward N. Wolff

New York University (NYU) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Bard College - Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504
United States

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