Income, Inequality, and Food Prices: A Critique of Broda, Leibtag, and Weinstein's "The Role of Prices in Measuring the Poor's Living Standards"

Abstract

In "The Role of Prices in Measuring the Poor's Living Standards," Christian Broda, Ephriam Leibtag, and David E. Weinstein (2009) use proprietary data -- the 2005 Nielsen Homescan dataset -- to analyze differences by income level in the prices paid for food. They find that Nielsen households with incomes above $60,000 pay somewhat more for the same food items than most households with lower incomes, with Nielsen households with incomes above$100,000 paying the most. Based on this finding and additional regression analyses, they conclude broadly that the "poor pay less -- not more -- for the goods they purchase" and that not accounting for this suggests that income inequality may be between 2.5 to 5 percent less than shown by national statistics