Assessing the economic status of the aged and nonaged using alternative income-wealth measures

This exploratory article examines several aspects of the complex problem of combining data on income and wealth into a single measure of economic well-being. Examples of income-wealth measures that have been used are described. Estimates of the economic well-being of age groups in the current period are presented for several measures. To examine the sensitivity of the results to the choice of method, those estimates are compared. In this article, wealth is defined to include only financial assets. Data from the 1984 Survey of Income and Program Participation are used. The economic status of the aged relative to the nonaged improves when the measure of resources is changed from income to a combined income-wealth measure. The amount of improvement depends on the income-wealth measure used. When medians are examined, the differences among most of the measures compared are not very large. For every measure compared, the median rises as age increases, then falls. When the percentage of each age group that is in the bottom of the distribution is examined for several income-wealth measures, the differences among measures are small. In general, these percentages are relatively high for the young and old age groups, and relatively low for the middle age groups.