Income Distribution and Inequality: Measurement Issues

Recent research establishes strong evidence that economic inequality in the US has increased over the past few decades, but that the amount of increase varies by the measure used. In this article, we will examine the components of measures of inequality – the 'who, what, where, when, why, and how' of inequality measures. We show that what resource measure, which data source, and whose standard of living all affect the measurement of both the level of trend in inequality. We also provide examples of how these choices affect the increase in inequality in the US.