Indicators of Consumption Inequality - Dr. Avichai Shnir

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Inequality in consumption is primarily important because it is consumption, not income, that influences the standard of living. Therefore, differences in consumption more accurately indicate differences in living standards than differences in income. An extreme example is the kibbutzim in Israel during the 1960s and 1970s. Among the kibbutzim of each movement, there were almost no differences in consumption despite significant differences in the incomes of each kibbutz.