Gender equity should be measured by consumption, not income?

In listening to self-described “radical” and “feminist” economists at the American Economic Association conference (example) and also in reading popular articles such as “Pay Gap Is Because of Gender, Not Jobs” (nytimes), the fact that men and women in the U.S. earn different amounts via W-2 wages is accepted as ipso facto evidence that our society is unfair and needs “reform.”

Perhaps we do need reform, and perhaps there is discrimination by employers, but I’m wondering if this is the most important analysis for figuring out if society overall is unfair. Does it matter to Citizen Ruth what she earns, and therefore what she can write down on her 1040 tax return, or what she can spend, and therefore the kind of lifestyle she can enjoy? If spending power is relevant then we may not have any idea how equitable our society is.

Simplest corrections: Do women typically give men more gifts or vice versa? Spending power should be corrected for that. What about paying for vacations and entertainment? If there is a disparity in who pays for these, including among the unmarried, that should go into the accounting. Cash income? Are men or women tending to earn more in the cash or underground economy? Cost of living adjustments? Are there more men versus women who live in high-cost states such as Hawaii, California, New York, or Massachusetts? Are there more men than women who live in high-cost cities versus low-cost rural areas?

For the bigger corrections we need to consider once class at a time.

Let’s consider poor Americans first. A poor woman, like a rich woman, is overwhelmingly likely to be the winner of any kind of custody dispute in the U.S. courts. Thus she is more likely to have possession of a child than would be a poor man. If we assume, as do the child support guidelines, that the child has no value to the parent and is a pure cost, the mother may be better off than the father even if the father is also poor and pays her minimal cash. A poor single parent is entitled to a lot more welfare benefits than a poor childless adult. The single mother may get a free apartment, cash payments, additional food stamps, etc., that are unavailable to the single father. Those should be entered on the female side of the ledger. (“The Work Versus Welfare Trade-Off: 2013” report from Cato Institute runs the numbers for a single mother with two children, roughly equivalent to a pre-tax wage of $50,540 per year in Massachusetts.)

What about married people? A married person, especially if he or she left the workforce for a number of years, may have a lower W-2 wage compared to an equivalently educated spouse. Yet the lower-income spouse may be able to spend some of the higher-income spouse’s wages in addition to his or her own, possibly enjoying a higher ability to consume than does the nominally higher-earning spouse. If it is primarily women who are the lower-earning spouses in marriages then this correction would result in a boost to total female spending power. [Anecdotally when our married friends talk about a financial decision, e.g., whether to do a kitchen renovation desired by the wife or to spend money on a hobby or trip as desired by the husband, it is generally the wife whose preference prevailed.]

How about divorced Americans? Our interviews with divorce litigators nationwide reveal that in many jurisdictions the spouse with a lower earning capacity would be entitled to a larger-than-50-percent share of any marital assets. These money flows can be significant but are not present in any statistics on earnings or wages. (See, for example, the $1 billion that Harold Hamm was ordered to pay the wife who sued him.) In most states the lower-earning spouse can also get alimony, which would appear in household income data (assuming that she voluntarily and accurately reports it to a surveyor) but not in any data on wages (the primary source for complaints that the U.S. is gender-biased). A divorced adult may also collect child support (see below). Again, if the lower-earning spouse tends to be a woman correcting for these effects will boost total female spending power.

Divorce itself can be a significant expense (estimated at roughly $50 billion per year paid to lawyers, psychologists, etc.) and divorce litigators nationwide told us that often men were ordered to pay women’s legal fees. So it would make sense to look at who filed the divorce lawsuit (mostly women) and assume that the person did so for personal benefit, then look at who was ordered to paid the costs (ultimately the children, actually, say the litigators), and treat that spending as a gift from one gender to the other.

What about never-married Americans? Never-married women who live in cities may actually earn higher wages than men (punditfact). The Wall Street Journal says that never-married women nationwide earn 96 percent of what men earned, according to the BLS. Based on our interviews with attorneys and consumers, however, the official stats leave out some spending power. Some single women who became pregnant in states with unlimited child support managed to sell their abortions ($250,000 was a typical number and no W-2s were issued for this “labor”). If a child is produced, a never-married woman could supplement her income by having a child and collecting child support.

How does the child support system affect this analysis? Suppose that an adult American has three children with three dermatologists. If the sexual acts that produced these children occurred in Wisconsin, the parent who wins custody can get 17 percent of each doctor’s pre-tax income, pretty close to 33.3 percent of post-tax income and thus his or her net spending power is the same as any one of the dermatologists. As women have the power to decide whether or not to carry a baby to term, it would most likely be a woman in this situation. If she got bored and decided to take a $20,000/year job at a non-profit organization her W-2 earnings and the doctors’ would go into the comparison cited by political advocates to show that women in the workforce were not being treated fairly.

The adult who gets custody of a child also has a lower tax rate for his or her earnings. Regardless of the amount of child support revenue or how much, if any, is spent on the child, the child is a “dependent” from the IRS’s point of view and the custodial parent gets a tax deduction for that child. If the custodial parent receives gifts or buys things for the child and then gives those things to charity, the adult can take a tax deduction for the value of the items. Once again, this lifts spending power without changing W-2 earnings. (See “The High Price of Being Single in America” (Atlantic) for how small tax advantages can add up.) To the extent that it is primarily women who can choose whether or not to continue a pregnancy and who can obtain custody of a child, this correction would result in an increase in spending power for women.

Readers: What else would be required to create an accurate accounting of the difference in spending power between America’s men and America’s women? And is it more important to focus on spending power or on W-2 wages?


14 thoughts on “Gender equity should be measured by consumption, not income?

  1. I know you’re working on a book about it, so it must be all consuming, but do you have estimates of how many people are involved in alimony and child support payments? How many women receive, how many women pay?

  2. Bill: It is tough to say exactly how large a portion of the economy alimony and child support revenues are. There is no comprehensive data kept. There are some Census surveys of households but those are pretty thin and people may lie and/or simply be confused when asked about “income”.

    There are some aggregate numbers on child support put out by the Federal Office of Child Support Enforcement. See for where they say that they are collecting support for 17 million children (i.e., spending power). Some other fact sheets they put out indicate that 82 percent of custodial parents “eligible” are women and for “poor” families child support is 45 percent of “family income” (i.e., it could be a significant correction to male/female spending power, unless it is swamped by welfare payments). I don’t think this office gets involved, however, unless the defendant misses a payment and their services are invoked. So the cases we pulled in Massachusetts where a plaintiff is collecting more than the median household income via child support likely wouldn’t be in there.

    A lot of the most lucrative cases described to us by attorneys are either in courthouses but sealed from the public automatically (because the parties weren’t married) or never made it to the courthouse (e.g., because a woman sold an abortion rather than waiting for a child to be born and collecting child support and/or a married man paid a woman extra money on condition that she would not file a public case).

    On alimony I think it is in the Consumer Expenditure Survey ( ), though researchers told us that people aren’t very forthcoming when it comes to abortions, alimony, etc. I can’t find it on the BLS site, though. says that it is based on CEX data and is able to say that Bostonians pay 330% more in alimony than average U.S. citydwellers (presumably adjusted for income). Maybe you have to get the whole data set and crunch it yourself. But that’s why it is an interesting project rather than something easily looked up with Google.

  3. Every year or two, a study makes the news rounds by declaring that the job of a mom/wife is worth a six figure salary. The studies do so by assigning hourly rates for child care workers, chefs and managers who are on the job for 24 hours a day. These studies and news reports are ridiculous for many obvious reasons.

    I think much of what you’re inferring to here uses the same type reasoning.. but looking at it from the opposite side.

    You point out areas where women may have additional ‘spending power’ which aren’t reflected in W-2 earnings.. but women tend to do more work that doesn’t show up in W-2s.

    Take your spending anecdote as an example; it’s not fair to treat the kitchen and the trip as equals. You’re implying that the woman’s choice usually wins out, when in reality it’s the responsible choice that usually wins out. Investing in the home’s value and making cooking more efficient is a better use of money than a trip. From what I’ve observed, women enjoy trips and hobbies just as much as men do.

  4. mark: The friends I mentioned were “making cooking more efficient” by not having a kitchen for 6 months (after the contractor promised to do it in 2). And they replaced a perfectly functional 4-year-old GE range with a non-functional Viking as their “responsible choice”? Then they threw out 10-year-old cabinets to get ones with a different finish as their “investing in the home’s value” (in a place where homes are appraised by the square foot).

    I don’t think this is the same as trying to put a hypothetical value on the minutes of child care delivered by a household member. The original complaint is about an unfair allocation of society’s resources. So I’m asking if spending power is the relevant analysis since spending power is a measure of resources available.

    [Separately, I don’t think that it is that hard to value a stay-at-home parent anymore at commercial rates. Everything is for sale now. You can dump a child into commercial day care, for example, all day every day and there are national statistics on what that costs (depending on the state, about $60k for virtually all non-sleeping, non-TV watching, non-public school hours, age 0-12). You can get prepared meals at Whole Foods for the entire family. And of course people who give up being stay-at-home parents in order to take a W-2 job give us some information about what the value to the family of them being at home was.]

  5. Marketers seem to believe women control spending. I’ve heard this elsewhere here and there (e.g., why are TV shows so clearly oriented to entertaining women?) but here are a few indicators:

    * There are $7 trillion spent in consumer and business sectors in the United States each year.

    * Women control 2/3 of consumer wealth.

    * Women make or influence 85% of all purchasing decisions.

    * Women purchase more than 50% of products traditionally bought by males, such as cars, do-it-yourself tools and electronics.

    More at:

  6. From today’s work on the 51-states book… (Indiana Chapter)

    Can the mother wait until the child is 19 and then file a lawsuit for child support retroactive to the birth? “She can actually wait until the child is two years past 19,” said [our interviewee]. He sent us a case that his partner handled, In the Matter of the Paternity of A.J.R., 702 N.E. 2nd 355 (1998). As in some other states, much regarding money flows between unmarried parents is not public. This appeals court case uses initials to refer to the litigants. The mother was a 33-year-old graduate student and the father was a 23-year-old undergrad who “engaged in sexual intercourse with each other during their [1983] stay in Paris.” The father went to graduate school (with no taxable income) and then worked as a research fellow at low wages while the mother became a professor at the University of Minnesota. Just as the father was completing his professional training, in 1995, the mother began pressing the father for support for the 11-year-old girl. The girl was 14 when the trial court finally ordered to pay $6,760 per year in child support going forward plus $21,710 in retroactive support (starting two years prior to the mother’s filing of the lawsuit). The father was also ordered to pay for the mother’s “prenatal, delivery, and post delivery medical services,” plus interest going back to 1983. The mother had been on sabbatical in West Africa just after starting her lawsuit and the father was ordered to pay for her trip back to England for blood testing. The father was finally ordered to pay for 100 percent of the mother’s legal fees. The total amount of the order would have been roughly $100,000 in 2015 dollars.

    The appeals court trimmed back some of the mother’s gains at trial, noting that the father had only recently begun earning a professor’s salary at the time of the lawsuit and therefore it was unfair to use that salary for calculating retroactive support. The appeals court also noted that the mother should pay her own legal fees because she earned slightly more than the father, had been working at a professor’s salary for 10 additional years, and did not have two additional children at home to support as did the father.

    —————— end of excerpt

    With simple W-2 earnings analysis it looks like the woman out-earns the man by about 6%. But the man has two kids and doesn’t receive child support from anyone. Whereas the woman has one child and gets a $100k tax-free cash injection (trimmed back to about $80k by the appeals court). So the woman should have substantially higher spending power.

    I don’t think that there is anything unusual about these people except that, due to the age and earnings disparity, the woman waited an unusually long time before suing.

  7. The discussion so far assumes that gender equity should be quantified using some sort of monetary measure (wages, consumption, etc.). I think this assumes that humans value a quantity of money over anything else, and if I don’t have as much as the average member of the opposite sex, then we need reform!! I’m not sure this is a correct assumption.

    Perhaps a better measure would be the quantity of free time a person has. Maybe I’m wrong, but don’t we value the time we have that is absolutely free of job, child care, school, chores, or other responsibilities more than anything? I don’t think this makes the comparison between the sexes any easier, but I think it may be a better measure.

  8. We have just the same inaccuracy of earnings, versus actual income, reporting here in the UK.

    My neighborhood, in the east end of London, is considered highly deprived. Often it qualifies for EU grant funding for social development programs and even social housing repair. The blocks opposite our, private but ex council lease, building, have been throng three refurbishments in ten years. I was not so surprised at the scaffolds going up, it didn’t look a great job last time around, but then I saw the trucks pull up: I forgot that everyone got new kitchens and bedroom furniture, in these “essential repairs”. Maybe they are essential, but it is a benefit that mocks those among my friends who spend silly money on their kitchens*, myself once included because of being conned as to spec, and starting again. Doubly so, because the private market for builders is driven by big project schemes, and so you pay more for work, the same which is done for free for those living, virtually for free, next door. There are potential tensions here that sometimes frighten me.

    Yet the actual household income, is grossly misreported.

    A single mother of three, not uncommon about here, will often have a income approximating USD $1000 per week, once all benefit payments are accounted for.

    The true income level is considerably higher.

    A two bedroom apartment, anywhere in this borough, costs about GBP 400 per week and upwards. Four hundred pounds a week is low end, really. Or rather, the clearing floor, per square foot, for about 700sqft in a very dense population.

    Often, rental values on the open market are considerably higher.

    Yet the housing stock is dominated by SoCal housing programs, either local government projects, or “housing association” properties. George Peabody is the American who brought us first the most essential projects, and be is commemorated in a statue, next to Reuter, behind Bank Station. With the exception of Peabody buildings, which had a central plan, most housing association properties are Edwardian, and built to a quite grand scale.

    So, I have the situation where a friend pays a rent capped 80 pounds a week, for a flat worth close to 800 a week, on the open market.

    A post tax income of $50,000 pa is therefore really not uncommon.

    Yet, only taxable income, and obviously none of the subsidies, will be reported.

    It’s interesting to read the constant British rebukes of contributions to the EC social funds, when large parts of our capital city see lots of those monies recirculate so quickly.

    I live in Tower Hamlets, and a quick search for “tower hamlets corruption” will provide a rich vein of results. We live in a city that makes me think of NY, NY, I’m the 70s, in terns if endemic problems caused by mismatching accounts, and the resulting perceptions so very closely held out as truths, politically.

    There is tremendous opportunity, about where I live, to “succeed” via graft. I’ve had a fair few approach me, hoping to capitalize on my relatively visible education and “posh” voice, even. Stories difficult to make up.

    Regardless any of the situational comparisons, I appreciate the tenor of this post, which I interpret simply as equality comes only if you first measure fairly. I fear, at least in our highly politicized and unabashed socialist culture in the UK, such measurement is perennially a endangered species. You may have all you like, in economists’ conferences, but don’t dare speak out to anyone in the street!

    *”Kitchen Mania” overtook my set, once in the property boom, which boom of many I forget now, you have to keep track of the swings. This addendum is about the value per square foot, applied by realtors about here, and almost every place in cities. It’s very very rare, to see any return on higher spec work on a apartment or house paying off. This is dictated by the lenders, whose actuaries set the limits. I think that grossly unfair, but the property fame is riddled with inequity at every level, every which way.

  9. >The friends I mentioned were “making cooking more efficient” by not having a kitchen for 6 months.

    When my new kitchen was being built (it was an addition that increased the s.f. of the house so my heirs will get (at least some of) the money back – I’m not selling anyway) we made do with a jury rigged kitchen in our 3 season closed porch and back yard (it was the summer). I used a portable induction burner plus a butane burner (these are super cheap (as in under $20) at Korean grocery stores) plus my gas grill and an outdoor turkey fryer/wok burner and a convection microwave oven and a toaster oven and a bar/dorm type fridge. I jury rigged the old sink in the back yard (cold water only and the drain flowed onto the ground) but I hear the latest hot item is an outdoor hose bib that does both hot and cold) and the old dishwasher got hooked up temporarily to the utility sink in the basement. I was able to do everything that was doable in a “real” kitchen – stovetop cooking, baking, etc. The total amount that I spent on equipment was a few hundred $ and most of this stuff I was able to keep using afterward or I owned already (the butane burner is great when the power is out to my new induction stove). At one point we even hosted a large dinner party. It really wasn’t that different from cooking in a “real” kitchen (a lot of new high end restaurant kitchens use individual induction burners) and if I had never gotten my “real” kitchen back it would not have been intolerable. Modern kitchens are mostly about showing off – you really don’t need super expensive equipment. If I really had to, I could have pared it down to just the $20 butane stove and we wouldn’t have starved. When I was in China I saw a lot of cooking being done in the street with simple clay wok stoves that burned charcoal and it was mighty tasty.

    A Viking range is essentially 5 of those $20 butane burners stuck together on top ($100) plus a convection oven ($150) underneath so you wonder how that adds up to $5,000. I guess a factor of 20x is not excessive for a Veblen good.

  10. You’re right. What you are doing is not the same as assigning monetary value to all household work.. that was an unfair comparison.

    I still think that your example of how men want to spend money vs. women isn’t a good way of displaying differences in spending power.. but then again, showing that it’s a difficult thing to measure is your entire point.

  11. Chuck: You raise an excellent point regarding looking at free time. But on the other hand that would show that society is treating a Fortune 500 CEO very badly indeed, despite his or her $5+ million/year salary. Maybe it would have to be adjusted for whether the lack of free time was voluntary or involuntary. The CEO would probably have enough savings to retire into a two-bedroom condo anywhere in the world.

    Mark: You’re probably right that for a formal analysis one would have to consider any spending on a jointly occupied house as delivering equal benefit to both adults in a couple. There aren’t consistent data regarding any discussion about whether to buy the Viking range or leave the 5-year-old GE.

  12. philg, there is also the money that men spend on women (women rarely spend much on men).

    For instance, a girl used while living in NYC to score $1200/month worth of dinners from guys she used as chumps. see

    And what amount of tips do waitresses get vs waiters I wonder? The Hooters premium (attractive women get paid more for low-end work) applies only to women, not to men.

  13. @ Izzie,

    The gas burners on my family home’s range lasted form 1936, until “safety gas” came in at a different pressure, nearly thirty years ago, were modified, and lasted until a little after I was born, so about forty years run. Even then, the “upgrade” was purely for trivial reasons, my pop thought my mom wanted a new range, not connected with his first wife’s life, ermm…..

    We have here no gas, because since a handful of tower blocks blew up in the late seventies about here, because of trivially simply lack of concern for elementary installation care, but in twenty years we’re nearly on our fourth electric stove, for one reason or another. Not all, but two of them were very expensive, almost in Viking pricing range. (Viking, unavailable here, looks good value, compared with the build you get on European kit, believe me.) I was friendly with a fairly large independent distributor, because he was a neighbor of a friend, and he said he specifically chose which factory was producing supply of Neff/Miele/AEG .. I think those are the same group, along with Bosch, but the point was he didn’t like the QA except for one factory in Italy. That stove hob died because of a builder dropping a mallet on it, not for any inherent fault.

    I often idly wonder if one could successfully sell a brand of kitchen kit under the name “Veblen”. It would sound good, to some, for sure… I once read a story, tall though it may have been, how a female student sold sexual favors in exchange for “Le Creuset” stoneware bakery kit… probably a Sunday supplement magazine, but it reminds me of a whole set of people I once was friends with, within which ownership of expensive cookware was considered de rigueur for acceptance.

    Myself, I’m struggling to get a quite to have my tiny (by American standards)kitchen replaced wholesale with a truly professional stainless steel build, the kind I expect to outlast my lifetime. Electrolux promise me a quote, soon, but we’re also blessed with plentiful small industry nearby, metalwork shops and fabricators, lots of CNC tooling… _this darned kitchen is going to stay put and be the last!

    We’re presently running a very simple jury rigged system i’d be absolutely happy to continue with, if it didn’t spoil the appearance and utility of valuable space in our tower flat. Those basic burners you can get — import on 120v means I had to install a better circuit breaker, as the current drain is a bit close to the spec of my originally over specified distribution box, I never got three phase as atop our tower the cell company grabbed every feed, we’ve a substation out back, I’m going to check again if there’s a drop available — are very good, there’s no reason other than aesthetics or space or neatness, to need more, and I’m constantly cooking about home, it’s a passion.

    Sorry for the aside, but I often wonder how much benefit could be done, by artificially mandating the supply of consumer goods, restricting production to decidedly robust units which would last a generation… what could we do with all the then suddenly diverted energies human and financial? My apologies for the overtly communist, or dictatorial, bent I tend to exhibit, but it does take me aback, wondering how much of modern life simply cannot be improved by vast energies expended on design and consumer focused engineering! Seriously, though, the way I read the economy, ideas such as this may not be the most radical ways to try to regain the generations of wealth we appear to have squandered.

  14. Oops, sorry, safety gas came in nearly sixty years ago, not thirty, I was remembering the “upgrade” to our range; the adjustment for safety gas, added sulphur to repel and alert for leaks, was much before my time.. and then there was the North Sea supply change, which I think was what I remember, as a little boy,

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