Rethinking Inequality: Consumption versus Income and Wealth

Abstract

This article examines the evolution of inequality since 1920, highlighting the need to rebalance research and public debate toward the forms of inequality that matter most for social welfare. While income and wealth disparities have received overwhelming attention in academia and public policy circles, consumption inequality, a more relevant indicator, has declined over the last two and a half decades. The main characteristics of developments in income and wealth inequality over time (since 1920) are presented: the share of the top 1% of earners followed a downward trend until the 1970-79 decade, and an upward trend thereafter, returning to levels comparable to those of the 1920s. The share of the top 10% of earners followed a similar movement. Despite the prominence of distributional issues in contemporary debates, comprehensive measures of consumption inequality remain underdeveloped. Yet the need for such metrics is urgent. Progress over the past 25 years—led in part by initiatives at Statistics Canada—offers a promising foundation for more accurate and policy-relevant assessments of economic well-being. One important factor has been the development of social transfers in kind ( STiK), which add significant resources and benefits to households in the lowest income quintile to a greater extent than to those in the highest quintile.

Reference

Marcel Boyer, and Molivann Panot, “Rethinking Inequality: Consumption versus Income and Wealth”, TSE Working Paper, n. 25-1691, November 2025.