The Unchanging Pattern of Income Distribution Business educators recognize that sumer
con-
behavior is multi-dimensional.
Various important
demographic, socioand economic, psychological factors influence consumer spending. One of the key determinants of consumption is inone variable which influences strongly consumption, it is the size of a person’s income. As Paul Samuelson states, &dquo;If you can know but one
come, for if there is
fact about come will
a
man,
changes in the distribution of income between different income groups. This article examines the question of distribution of family income and provides data to counter the belief in income with
knowledge of his
in-
probably reveal most about him.&dquo;’ Knowledge of the level’of aggregate personal income and awareness. of the pattern of income distribution is necessary for accurate estimation of consumer demand. Yet many widely read business texts present income data
that a substantial redistribution has cured in the postwar period.
oc-
The cited texts state that the pattern of income distribution is shifting in favor of the lower income earners, who are depicted as improving their position both relatively and absolutely. A closer look at the available data reveals that while lower income groups have increased their &dquo;real&dquo; incomes (money income deflated for changes in cost of living), so also have higher income groups. The resultan shares of aggregate income are
therefore unchanged. It can be seen in Table 1 that relative distribution of income has remained constant in the period 19481972. The lowest twenty percent of families received 5.0% of aggregate income
using methods which are open to misinterpretation. In some texts the misinterpretation is made explicit by the
virtually
author.&dquo; The error concerns the issue of distribution of income. It is a common fallacy to assert that there has been a significant redistribution of personal income in recent decades. These notions of income distribution persist because authors have confused absolute changes
in in
1948, 4.8 % in 1955, 4.8 % in 1960, 5.1 % 1965, 5.6% in 1970, and 5.4% in 1972. By contrast, the highest twenty percent of income earning families received
a
42.5To share of aggregate family income in 1948, 41.8 % in 1955, 41.3 % in 1960, 40.9% in 1965, 40.9% in 1970, and 41.1%
Clifford Elliott is a Professor of Marketing in Memphis State University’s College of Business Administration. He holds an M.A. in Economics from the University of Queensland and a Ph.D. from Ohio State University. His articles have appeared in Administrative Management, Personnel Journal, Data Management, and other
