The distribution of expenditure in Spain, 1973-74 to 1980-81

This paper examines how far we can go in establishing normative conclusions with regard to the evolution of inequality over time, making use of statistical methods which do not need either too specific assumptions about individual preferences, or their recovery by means of complex and expensive econometric methods. The decomposition of the change in money inequality into a real and a price effect occupies the center of the analysis. We have used statistical Laspeyres type price indices which are household specific, and a parametrization which captures the weight one is prepared to give to household size in the definition of equivalent expenditure per person. The central finding is that the improvement in real inequality in Spain from 1973-74 to 1980-81 is always greater than the improvement in money inequality. Changes in relative prices have been less damaging to the poor than to the rich, and have had a uniform impact across groups from different partitions. The explanatory power of overall inequality provided by different characteristics is studied by means of statistical constructs independent of the equivalence scale used