:: Levy Economics Institute of Bard College ::

The Levy Institute Measure of Economic Well-Being (LIMEW)

The LIMEW is informed by the view that three key institutions—the market, state, and household—mediate the access of the members of the household to the goods and services produced in a modern market economy. The magnitude of the access that can be exercised by the household is approximated by a well-being measure that reflects the resources that the household can command for facilitating current consumption or acquiring physical or financial assets. The three institutions form interdependent parts of an organic entity, and household economic well-being is fundamentally shaped by the complex functioning of this entity.

The LIMEW has two crucial characteristics. First, its focus is limited to components that can be converted into money equivalents. Second, it is a household-level measure that can be evaluated for households in different economic and demographic groups, such as those in different percentiles of the income distribution or those in different racial groups.

The LIMEW is constructed as the sum of the following components: base money income (gross money income less government cash transfers and property income), the value of certain employer-provided in-kind benefits, income from wealth, net government expenditures (transfers and public consumption net of taxes), and the value of household production. In the absence of an ideal, unified database to measure household economic well-being, the LIMEW is built using mainly information from income and employment surveys (e.g., the Annual Demographic Supplement of the Current Population Survey conducted by the U.S. Census Bureau), other surveys on wealth and time use, National Income and Product Accounts, and government agencies.

Research Group: Edward N. Wolff, Dimitri B. Papadimitriou, Ajit Zacharias, Thomas Masterson, Melissa Mahoney

Program Publications
Working Papers \| May 2008 Statistical Matching Using Propensity Scores This paper summarizes the background, type, logic, and working procedure of the statistical matching used in the Levy Institute Measure of Economic Well-Being (LIMEW) project to combine the various data sets used to produce the synthetic data set with which the LIMEW is constructed. The authors use the match between the 2001 Survey of Consumer Finances and the Annual Demographic Survey of the Current Population Survey data sets to demonstrate the procedure and results of the matching. [more] Working Paper No. 535
Book Series \| October 2007 Government Spending on the Elderly The results are in: we are aging—individually and collectively, nationally and globally. In the United States, as in most countries with an advanced economy, the aging of the population will be a primary domestic public policy issue in the coming decades. [more] Book Series, October 2007
LIMEW Reports \| April 2007 How Well Off Are America’s Elderly? Given the aging of the American population and the widening gap between rich and poor, not to mention the controversy surrounding the future viability of Social Security, the economic welfare of the elderly is an extremely topical issue. This report provides a new look at America’s elderly, and shows that the official measures drastically understate their level of economic well-being. [more] LIMEW Report, April 2007
Book Series \| December 2006 International Perspectives on Household Wealth The contributors to this comprehensive book compile and analyze the latest data available on household wealth using, as case studies, the United States, Canada, Germany, Italy, Sweden, and Finland during the 1990s and into the 21st century. The authors show that in the United States, trends are highlighted in terms of wealth holdings among the low-income population, along with changes in wealth polarization, racial differences in wealth holdings, and the dynamics of portfolio choices. [more] Book Series, December 2006
LIMEW Reports \| December 2006 Wealth and Economic Inequality This report argues that wealth is an integral aspect of economic well-being. The authors combine income and net worth to demonstrate the importance of wealth inequalities in shaping overall economic inequality and defining the disparities among population subgroups. [more] LIMEW Report, December 2006
Working Papers \| August 2006 Net Government Expenditures and the Economic Well-Being of the Elderly in the United States, 1989-2001 We examine the economic well-being of the elderly, using the Levy Institute Measure of Economic Well-Being (LIMEW). Compared to the conventional measures of income, the LIMEW is a comprehensive measure that incorporates broader definitions of income from wealth, government expenditures, and taxes. [more] Working Paper No. 466
Book Series \| July 2006 The Distributional Effects of Government Spending and Taxation This book focuses on the distributional consequences of the public sector. It examines and documents, both theoretically and empirically, the effects of government spending and taxation on personal distribution, that is, on families and individuals. [more] Book Series, July 2006
Working Papers \| May 2006 Household Wealth and the Measurement of Economic Well-Being in the United States The standard official measure of household economic well-being in the United States is gross money income. The general consensus is that such measures are limited because they ignore other crucial determinants of well-being. [more] Working Paper No. 447
LIMEW Reports \| May 2005 Interim Report This interim report compares the LIMEW and official measures of economic well-being for 1989–2002, a period marked by the economic boom of the late 1990s and a mild recession in 2001–02. All measures show that the well-being of the average American household was significantly higher in 2000 than in 1989, with most of the improvement occurring in the latter half of the 1990s. [more] LIMEW Report, May 2005
LIMEW Reports \| March 2005 Economic Well-Being in U.S. Regions and the Red and Blue States This report analyzes regional aspects of economic well-being according to four regions identified by the United States Census Bureau: the Northeast, Midwest, South, and West. Using the official measures and the Levy Institute Measure of Economic Well-Being (LIMEW), the authors examine how the average American household fared from 1989 to 2001 and discuss disparities in well-being among population subgroups and across regions. [more] LIMEW Report, March 2005
LIMEW Reports \| December 2004 How Much Does Public Consumption Matter for Well-Being? This report supplements previous findings of the Levy Institute Measure of Economic Well-Being (LIMEW) research project within our program on the distribution of income and wealth. Some readers have questioned the sensitivity of our estimates in view of our imputation techniques. [more] LIMEW Report, December 2004
LIMEW Reports \| September 2004 How Much Does Wealth Matter for Well-Being? Economic well-being refers to the command or access by members of a household over the goods and services produced in a modern market economy during a given period of time.The Levy Institute Measure of Economic Well-Being (LIMEW) is a comprehensive measure that is constructed as the sum of the following components: base money income (gross money income minus property income and government cash transfers), employer contributions for health insurance, income from wealth, net government expenditures (transfers and public consumption, net of taxes), and the value of household production. [more] LIMEW Report, September 2004
Book Series \| June 2004 What Has Happened to the Quality of Life in the Advanced Industrialized Nations? Throughout the 1990s the United States expanded its lead over other advanced industrial nations in terms of conventionally measured per capita income. However, it is not clear that welfare levels in America have grown concomitantly with per capita income, nor that Americans are necessarily better off than citizens of other advanced countries. [more] Book Series, June 2004
LIMEW Reports \| May 2004 Levy Institute Measure of Economic Well-Being This report presents the latest findings of the Levy Institute Measure of Economic Well-Being (LIMEW) research project within our program on the distribution of income and wealth. It enhances previous findings about economic well-being and inequality in the United States by extending our analysis to include additional years, 1995 and 2001, and by comparing our results with the Census Bureau's most comprehensive measure of a household's command over commodities, which we refer to as extended income (EI). [more] LIMEW Report, May 2004
LIMEW Reports \| February 2004 Levy Institute Measure of Economic Well-Being The Levy Economics Institute has, since its inception, maintained an active research program on the distribution of earnings, income, and wealth. [more] LIMEW Report, February 2004
LIMEW Reports \| December 2003 Levy Institute Measure of Economic Well-Being The Levy Economics Institute has, since its inception, maintained an active research program on the distribution of earnings, income, and wealth. [more] LIMEW Report, December 2003
Working Papers \| September 2003 Household Wealth, Public Consumption and Economic Well-Being in the United States *Preliminary draft. Please do not quote or cite without permission. [more] Working Paper No. 386
Working Papers \| February 2003 The Levy Institute Measure of Economic Well-Being Our measure of economic well-being is motivated by the conviction that there is substantial room for improving existing official measures of the level and distribution of household economic well-being. The definition of the scope of our measure is guided by an extended concept of income that fundamentally reflects the resources that a household can command for facilitating current consumption or acquiring financial and physical assets. [more] Working Paper No. 372
Working Papers \| February 2002 A Note on the Hicksian Concept of Income Empirical studies of intertemporal dynamics of individual income, distribution of personal income, and growth and distribution of national income are all based on statistics that rely on some concept of income. The dominant one today appears to be the so-called Haig-Simons-Hicks (HSH) concept of income. [more] Working Paper No. 342