Income inequality has no impact on consumption habits, study finds.
Household spending habits are influenced by income levels above basic needs. When looking at all households together, the total spending tendency is affected by income amount, distribution, and how evenly income is spread out. Research using data from over 30 countries found that income inequality does not significantly impact overall consumption. By analyzing both real and nominal incomes, researchers estimated a minimum income needed for basic needs ($300 real) and the average spending tendency (0.70-0.75). The data suggests that either distribution effects are minimal or the data used may not be suitable. To accurately assess the impact of income distribution on spending, data on income per person within households is necessary.