Old age, like beauty, is in the eye of the beholder. If by old age we mean the period of life characterized by a significant reduction in market work, then a major phenomenon of the last three decades has been that the old among us have gotten considerably younger. Here we briefly review this phenomenon, discuss a parallel growth in broadly defined income support, both public and private, and then provide a mechanism for relating the two.

Recent research on levels and trends in the United States in income inequality vary substantially in how they measure income. We show the sensitivity of alternative income measures in capturing income trends using a unified data set. Focusing solely on market income or including realized taxable capital gains based on IRS tax return data in more comprehensive household income measures will dramatically increase inequality growth compared to capital gains measures more in keeping with Haig-Simons principles. Using a measure of yearly accrued capital gains dramatically reduces observed growth in income inequality across the distribution, but also equalizes income growth since 1989.