Accounting for the Distribution of Income in the U.S. National Accounts

Abstract

The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income.-Simon Kuznets (1934, 7) Measured GDP growth is not the only contributor to the quality of life that Americans seek to enjoy.-"Economic Report of the President" (2012) Dennis Fixler is chief statistician of the Bureau of Economic Analysis. David S. Johnson is chief economist of the BEA. Research conducted while David S. Johnson was a visiting scholar at the Russell Sage Foundation and as staff at the US Census Bureau. The authors would like to thank Ed Wolff, Chris Carroll, Steve Landefeld, and participants in the NBER Conference on Research in Income and Wealth "Measuring Economic Stability and Progress" conference. The views expressed in this chapter, including those related to statistical, methodological, technical, or operational issues, are solely those of the authors and do not necessarily refl ect the official positions or policies of the Census Bureau or the Bureau of Economic Analysis, or the views of other staff members. The authors accept responsibility for all errors. This chapter is released to inform interested parties of ongoing research and to encourage discussion of work in progress. For acknowledgments, sources of research support, and disclosure of the authors' material fi nancial relationships, if any, please see http://www.nber.org/chapters/c12828.ack. 1. See http://www.grossnationalhappiness.com for a description of the gross national happiness index developed by the Center for Bhutan studies.

Measuring Individual Economic Well‐Being and Social Welfare within the Framework of the System of National Accounts

“…We match 15 expenditure categories to the expenditure categories available in the OECD's Annual National Accounts database (Table ). Clearly, this is a much rougher approximation than the match by Fesseau and Mattonetti (), Zwijnenburg et al () or Fixler and Johnson () but it serves the purpose of demonstrating feasibility of proceeding in this direction. The advantage of our approach is that it can readily be applied to several years and we shall present results for the period 2005–13.…”

“…Meyer and Sullivan () and Broda and Weinstein () show the important impact of alternative price indices. Fixler and Johnson () opt for the Personal Consumption Expenditures (PCE) deflator on the grounds that their work focuses on a national accounts‐based measure of income and its distribution. The same reasoning applies to the calculations at hand where consumption expenditure for the various product groups will be deflated with price indices from the national accounts.…”

“…Fixler and Johnson () report on early estimates by Budd and Radner () who combine survey and tax data sources to construct a distributional measure for the national accounts. Fesseau et al .…”

“…Similarly, Fixler and Johnson () present a methodology that adjusts the U.S. Current Population Survey—a household survey—to more closely match the national accounts measure of personal income. The authors then complement the survey source with data from tax returns to obtain more granular information on income distribution and apply this to the national accounts benchmarks of disposable household income.…”

Household Income, Demand, and Saving: Deriving Macro Data With Micro Data Concepts

“…As shown by Fixler and Johnson (), no two data sets chosen from among the Current Population Survey (CPS), the NIPA, the Congressional Budget Office, and the IRS Statistics of Income conform to exactly the same concept of income. Fixler and Johnson () work on methods to adjust the CPS to match the NIPA. Katz () presents methods similar to ours for adjusting the NIPA to match the CPS.…”