October 25, 2012

NO ONE HAS IT HARDER THAN THEIR FATHER DID:

Consumption and the Myths of Inequality : The standard of living has increased among all income groups over the past decade. (KEVIN A. HASSETT  AND APARNA MATHUR, 10/24/12, WSJ)

Another way to look at people's standard of living over time is by their consumption. Consumption is an even more relevant metric of overall welfare than pre-tax cash income, and it will be set by consumers with an eye on their lifetime incomes. Economists, including Dirk Krueger and Fabrizio Perri of the University of Pennsylvania, have begun to explore consumption patterns, which show a different picture than research on income.

Our recent study, "A New Measure of Consumption Inequality," found that the consumption gap across income groups has remained remarkably stable over time. [...]

From 2000 to 2010, consumption has climbed 14% for individuals in the bottom fifth of households, 6% for individuals in the middle fifth, and 14.3% for individuals in the top fifth when we account for changes in U.S. population and the size of households. This despite the dire economy at the end of the decade.

What about the standard of living over those years? The Department of Energy regularly surveys Americans and asks them to report on the characteristics of their homes, including the types of devices and appliances they have. If the standard left-wing narrative is correct, then a typical poor American would trade his current circumstances for those of the past in a heartbeat.

Yet the access of low-income Americans--those earning less than $20,000 in real 2009 dollars--to devices that are part of the "good life" has increased. The percentage of low-income households with a computer rose to 47.7% from 19.8% in 2001. The percentage of low-income homes with six or more rooms (excluding bathrooms) rose to 30% from 21.9% over the same period.

Appliances? The percentage of low-income homes with air-conditioning equipment rose to 83.5% from 65.8%, with dishwashers to 30.8% from 17.6%, with a washing machine to 62.4% from 57.2%, and with a clothes dryer to 56.5% from 44.9%.

The percentage of low-income households with microwave ovens grew to 92.4% from 74.9% between 2001 and 2009. Fully 75.5% of low-income Americans now have a cell phone, and over a quarter of those have access to the Internet through their phones.

We would hazard a guess that if you were to ask a typical low-income American in 2009 if he would like to trade his house for its 2001 version, he would tell you to take a hike. How then is he worse off in 2009?
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Posted by at October 25, 2012 5:29 AM
  

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