4 ms·

> People at all income quintiles have more and better stuff > now than people at the same quintile at all periods in the > past An alternative hypothesis

by joeyo 16y ago

> People at all income quintiles have more and better stuff > now than people at the same quintile at all periods in the > past An alternative hypothesis could be that a lot of the putatively better stuff that people have are produced significantly more cheaply today than in the past. Clothing and furniture, for example. The savings on these items would allow people to have other things (e.g. personal electronics) in quantities that didn't exist a generation ago.

randallsquared 16y ago
An alternative hypothesis could be Er, that's the same hypothesis, unless I misread g'parent: better and more stuff is cheaper, so even though incomes (measured by commodities or something) didn't go up much, we're all much better off.
yummyfajitas 16y ago
When someone claims wages haven't gone up in real terms, they are referring to inflation adjusted wages. So if costs went down 10%, but wages went down 20%, then real wages decreased 10% because people can purchase 10% less stuff than before. So the claim that "real wages have gone down" contradicts your description. What you describe is an increase in real wages. This presents a paradox - people often claim that real wages have remained flat/gone down. And yet, people have more stuff now than ever before, which should be impossible if real wages went down.
- nostrademons 16y ago
  I think what you're seeing is that there is no "real economy" - there are lots of microeconomies, in each good or service you can buy. Over the last 20 years, we've seen massive deflation in the markets for consumer goods. My first computer, not quite twenty years ago, cost $2500 and was a desktop with a 20 MHz processor and 2 MB of RAM. I now have a phone worth roughly $400 with a 1 GHz processor and 4 GB SD card. Meanwhile, there's been massive inflation in services, particularly health care and education. When my mom went to college, a $3000 National Merit Scholarship basically covered a whole year's tuition. When I went to college, tuition + room & board was roughly $40K/year, and is higher now. People are responding to those price incentives, which is why you see people at the poverty level with blu-ray DVD players, iPhones, and netbooks, but with no health insurance or college education. Prices for consumer electronics have come down so much that it's worth more to them to spend half a month's salary on a phone that they'll keep for a couple years rather than try to get health insurance that they can't afford anyway. Whether this is a good thing depends on whether you consider phones, computers, and entertainment to be more important than health care and education.
  - yummyfajitas 16y ago
    If your mom went to college in 1970, GDP per capita was only $5000. So one year of college cost 60% of GDP per capita, now it costs about 80%. That's an increase, but not a ridiculously large one. http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_pcap_cd&idim=country:USA&dl=en&hl=en&q=usa+gdp+per+capita http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_pc... In any case, I don't much care about education by itself, since most people value education only insofar as it allows them to get wealth. If people have more wealth, why would I worry about their education? (That's not to say that education is becoming more scarce - far from it. We are more education today than ever before.) The same applies to health insurance - I don't care about the cost of health insurance, I care about health. By most measures that I'm aware of, health is increasing. For example, life expectancy went up 8 years since 1970 and infant mortality went down more than 50%: http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_le00_in&idim=country:USA&dl=en&hl=en&q=life+expectancy+usa+graph http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_le... http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_imrt_in&idim=country:USA&dl=en&hl=en&q=infant+mortality+usa http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_im...
    - btilly 16y ago
      What you say is true, but over the same period the distribution of wealth within the USA has shifted dramatically. Therefore the median family income has not kept up with per capita GDP. The figures I have from http://www.davemanuel.com/median-household-income.php http://www.davemanuel.com/median-household-income.php go from 1975 to the present. $3000 in 1975 was 25.4% of a year's income for the median family. $4000 in 2009 was 82.5% of a year's income for the median family. My understanding is that tax rates on the median family have increased, making that picture even worse. Therefore education is much less affordable than it used to be for the median family.
      - yummyfajitas 16y ago
        You are correct to use median income, which was about $6500 in 1970, making $3000 = 46% of median income in that year [1]. You are also correct to say that taxes went up, by about 140% (according to Elizabeth Warren's data [3]). In any case, this only makes the paradox I highlighted more puzzling. College is more expensive, and yet college attendance per capita is up 40% over 1970 [2]. If real income is flat, then people must be giving up other goods and services to attend college. And yet, people seem to be consuming more goods and services of all sorts in addition to college. This doesn't make sense. I suspect that real income is being incorrectly calculated. [1] See the table here, and do an inflaction calculations backwards to see that the average income was $6500 in 1970. http://en.wikipedia.org/wiki/Household_income_in_the_United_States#Household_income_over_time http://en.wikipedia.org/wiki/Household_income_in_the_United_... [2] Combine data from here http://nces.ed.gov/fastfacts/display.asp?id=98 http://nces.ed.gov/fastfacts/display.asp?id=98 with the fact that the population went up about 50% between 1970 and today. [3] I'm citing Warren's data and ignoring her opinions. Some people seem to get confused when I do this, so I'll be really explicit about it.

by joeyo 16y ago

randallsquared 16y ago

An alternative hypothesis could be Er, that's the same hypothesis, unless I misread g'parent: better and more stuff is cheaper, so even though incomes (measured by commodities or something) didn't go up much, we're all much better off.

yummyfajitas 16y ago

When someone claims wages haven't gone up in real terms, they are referring to inflation adjusted wages. So if costs went down 10%, but wages went down 20%, then real wages decreased 10% because people can purchase 10% less stuff than before. So the claim that "real wages have gone down" contradicts your description. What you describe is an increase in real wages. This presents a paradox - people often claim that real wages have remained flat/gone down. And yet, people have more stuff now than ever before, which should be impossible if real wages went down.

nostrademons 16y ago
I think what you're seeing is that there is no "real economy" - there are lots of microeconomies, in each good or service you can buy. Over the last 20 years, we've seen massive deflation in the markets for consumer goods. My first computer, not quite twenty years ago, cost $2500 and was a desktop with a 20 MHz processor and 2 MB of RAM. I now have a phone worth roughly $400 with a 1 GHz processor and 4 GB SD card. Meanwhile, there's been massive inflation in services, particularly health care and education. When my mom went to college, a $3000 National Merit Scholarship basically covered a whole year's tuition. When I went to college, tuition + room & board was roughly $40K/year, and is higher now. People are responding to those price incentives, which is why you see people at the poverty level with blu-ray DVD players, iPhones, and netbooks, but with no health insurance or college education. Prices for consumer electronics have come down so much that it's worth more to them to spend half a month's salary on a phone that they'll keep for a couple years rather than try to get health insurance that they can't afford anyway. Whether this is a good thing depends on whether you consider phones, computers, and entertainment to be more important than health care and education.
- yummyfajitas 16y ago
  If your mom went to college in 1970, GDP per capita was only $5000. So one year of college cost 60% of GDP per capita, now it costs about 80%. That's an increase, but not a ridiculously large one. http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_pcap_cd&idim=country:USA&dl=en&hl=en&q=usa+gdp+per+capita http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_pc... In any case, I don't much care about education by itself, since most people value education only insofar as it allows them to get wealth. If people have more wealth, why would I worry about their education? (That's not to say that education is becoming more scarce - far from it. We are more education today than ever before.) The same applies to health insurance - I don't care about the cost of health insurance, I care about health. By most measures that I'm aware of, health is increasing. For example, life expectancy went up 8 years since 1970 and infant mortality went down more than 50%: http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_le00_in&idim=country:USA&dl=en&hl=en&q=life+expectancy+usa+graph http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_le... http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_imrt_in&idim=country:USA&dl=en&hl=en&q=infant+mortality+usa http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_im...
  - btilly 16y ago
    What you say is true, but over the same period the distribution of wealth within the USA has shifted dramatically. Therefore the median family income has not kept up with per capita GDP. The figures I have from http://www.davemanuel.com/median-household-income.php http://www.davemanuel.com/median-household-income.php go from 1975 to the present. $3000 in 1975 was 25.4% of a year's income for the median family. $4000 in 2009 was 82.5% of a year's income for the median family. My understanding is that tax rates on the median family have increased, making that picture even worse. Therefore education is much less affordable than it used to be for the median family.
    - yummyfajitas 16y ago
      You are correct to use median income, which was about $6500 in 1970, making $3000 = 46% of median income in that year [1]. You are also correct to say that taxes went up, by about 140% (according to Elizabeth Warren's data [3]). In any case, this only makes the paradox I highlighted more puzzling. College is more expensive, and yet college attendance per capita is up 40% over 1970 [2]. If real income is flat, then people must be giving up other goods and services to attend college. And yet, people seem to be consuming more goods and services of all sorts in addition to college. This doesn't make sense. I suspect that real income is being incorrectly calculated. [1] See the table here, and do an inflaction calculations backwards to see that the average income was $6500 in 1970. http://en.wikipedia.org/wiki/Household_income_in_the_United_States#Household_income_over_time http://en.wikipedia.org/wiki/Household_income_in_the_United_... [2] Combine data from here http://nces.ed.gov/fastfacts/display.asp?id=98 http://nces.ed.gov/fastfacts/display.asp?id=98 with the fact that the population went up about 50% between 1970 and today. [3] I'm citing Warren's data and ignoring her opinions. Some people seem to get confused when I do this, so I'll be really explicit about it.