ECONOMIC

in 1972 represent nearly a threefold increase in the number of AFDGfamilies since 1965. This increase can be partly explained by the spread ofknowledge about the program and the lessening of the social stigma attachedto it. In addition, the faster rate of increase of benefits to AFDG families,compared to average wages, contributed to the change by making the incentivesgreater for an existing female family head to apply for benefits, as wellas giving women an incentive to head a family.Social Security is the largest single Federal transfer program, with 28million recipients of old age, survivor, or disability benefits in fiscal 1973.Many of the recipients of old age and survivors' benefits were in familiesclassified as in poverty. For many others, however, social security kept theirincome above the poverty level.The Federal Government also transfers economic resources to aged andlow-income families by subsidizing the price of food, medical care, and housing.The Food Stamp Program, initiated in 1961, subsidized the purchaseof food for 12.6 million recipients from low-income families in fiscal 1973.The average monthly subsidy (of $15.30 per individual recipient in July1973) represents a substantial contribution to the economic well-being ofmany low-income families, although the food stamp subsidy is not counted inthe measure of income used to define poverty.A rapidly growing source of Federal transfers to the aged and the pooris medicare and medicaid, which lower the cost of medical care to therecipients. In fiscal 1973, 10.6 million people received medicare benefits, and23.5 million received medicaid benefits.The combined effects of the tax and transfer mechanisms of Federal,State, and local governments appear to redistribute income toward lowincomefamilies. Various studies have concluded that when accrued capitalgains are included in income the tax system is roughly proportional in theincome ranges in which most Americans are located, but regressive for verylow incomes and progressive for very high ones. However, some governmenttransfers have a strong effect of redistributing income to low-incomefamilies. These include public assistance programs, social security, foodstamps, medicaid, and medicare.THE CHANGE IN INEQUALITY OF FAMILYAND INDIVIDUAL INCOMEBetween 1947 and 1972 median family income, adjusted for the rise inprices, doubled. This rapid increase in the overall level of income tells usmuch about the change in living standards, but it tells only part of thestory. The extent to which the gains from economic growth have been diffusedthroughout the population is also important.SECULAR CHANGESThere are various ways of illustrating the distribution of income amongpersons and of measuring the amount of inequality in the distribution.139