Households Insure Consumption Against Shocks, Inequality Persists in Australia
Household inequality in Australia from 2001-2017 was studied. Earnings inequality decreased over time, but inequality in disposable income, consumption, food expenses, and net worth stayed relatively stable. This suggests that households protect their spending from unexpected events. When income changes, spending changes too, showing that households adjust their consumption based on their income. Those whose spending decreases with income drops are more affected by negative income changes, and vice versa.