The paper by Angus Deaton and Christina Paxson investigates the relationship between intertemporal choice and inequality, focusing on the permanent income hypothesis (PIH). They use cohort data from household surveys in the United States, Great Britain, and Taiwan to examine how consumption, income, and earnings inequality change over time within cohorts. The results show that within-cohort consumption and income inequality increase with age in all three economies, with similar rates of increase. The PIH predicts that this increase reflects cumulative differences in the effects of luck on consumption. Other models, such as those with precautionary motives or liquidity constraints, can limit or prevent the spread of inequality through insurance arrangements. The study helps quantify how private and social arrangements moderate the impact of risk on individual welfare distribution. The authors also explore the role of household size and composition in explaining the observed dispersion in consumption and income. The theoretical interpretations of the findings are discussed, including the implications of the PIH for the evolution of inequality and the shape of the age-inequality profile.The paper by Angus Deaton and Christina Paxson investigates the relationship between intertemporal choice and inequality, focusing on the permanent income hypothesis (PIH). They use cohort data from household surveys in the United States, Great Britain, and Taiwan to examine how consumption, income, and earnings inequality change over time within cohorts. The results show that within-cohort consumption and income inequality increase with age in all three economies, with similar rates of increase. The PIH predicts that this increase reflects cumulative differences in the effects of luck on consumption. Other models, such as those with precautionary motives or liquidity constraints, can limit or prevent the spread of inequality through insurance arrangements. The study helps quantify how private and social arrangements moderate the impact of risk on individual welfare distribution. The authors also explore the role of household size and composition in explaining the observed dispersion in consumption and income. The theoretical interpretations of the findings are discussed, including the implications of the PIH for the evolution of inequality and the shape of the age-inequality profile.