We're Much Wealthier

This editorial in today’s New York Times — entitled "Downward Mobility" — does its best to
extract depressing news from the latest report issued by the U.S. Census
Bureau.

I, too, have perused this report. It inspires me to do a mental experiment – an
experiment related to one we’ve done before here at the Café.

Figure 1 on page 4 of the Census Bureau report shows the trend in real median household income
from 1967 to 2004.  It reveals that real median household income has increased, with the
expected blips and surges, over the past 38 years. But being 31 percent higher today than it was
in 1967 is not very impressive. This fact means that real household income grew at an average annual rate since 1967 of
much less than one percent.

But I ask: would you prefer to live in 1967 with today’s
real median household income ($46,326) or live today with 1967’s real median
household income ($35,379)?  (These
figures are expressed in 2005 dollars, by the way.)

Given these two options, I’d choose to live today with only
1967’s real median household income. The
reason is that the economy today offers so very many more options than did the
economy in 1967 – or even the economy of that halcyon year, 1973. Today I can buy cell-phone service; today I
can buy cable television with hundreds of channels, including ones that
specialize in sports, cooking, history, and science; today even the cheapest
automobiles are safer and more reliable than were the finest cars for sale in
1967; today I can buy telephone answering machines (with caller-ID), microwave
ovens, CDs, personal computers, Internet service, and MP3 players. Today I can watch movies in my own home – in
color – whenever I want without having to wait for one of the three or four
available television stations to telecast a movie for viewing on a
black-and-white television.

Today I can use GPS.

Today’s houses are bigger, on average, than a few decades
ago, and better equipped – and more affordable.

Today’s coffee is indescribably superior to the coffee
Americans regularly drank just a few years ago; the variety and quality of
teas is much higher; a huge selection of books is available at the neighborhood
Barnes & Noble or Borders – or through on-line retailers such as
Amazon.com. The variety of foods
available in supermarkets and at restaurants is much greater and, hence, more
interesting. And much of this food is
low-fat. (One-percent and two-percent
milk were not available to the typical American back in the day.)

The average number of items offered for sale by today’s typical supermarket is 45,000 (up from what I believe was about 5,000 in the late 1960s).

Today I can buy an inexpensive quartz wristwatch that keeps
time with remarkable accuracy.

Today, because of sites such as eBay, I have access to a thicker
market for selling my junk.

Today I can buy – or get in a cereal box – a powerful
electronic calculator. Today I can take
digital photographs and digital videos and send them by e-mail,
instantaneously, to family and friends around the world.

Today I can pay even for small purchases with a credit card
– or if I prefer to pay with cash, I can get that cash from an ATM.

Today I can have packages delivered overnight.

Today, anesthesia is much better. (Those of us who had teeth filled in the
1970s and again much more recently can attest to the enormous
improvement.) Many medicines available
today were unavailable back then. Today
I can wear not only soft contact lenses, but disposable ones that are cleaner
and more convenient than standard lenses. And if I choose, I can have my vision restored to 20/20 through Lasik
surgery.

Today — with Wal-Mart’s help! — I can check my cholesterol by myself, inexpensively and without fasting.

Today life-expectancy is
longer.

Americans today spend fewer hours per day on the job, on
average, then they did just a few decades ago. In 1960 the average length of the American work week was 38.6 hours; in
1973 it was 36.9 hours; in 1996 (the latest year for which I have data), this
figure was down to 34.4 hours. (Note
that from 1870 to 1996 the trend in the length of the work week has been steadily
downward; no reason to think that this trend has reversed itself in the last
ten years.) And because the average
number of days worked per year has also fallen, the average American worker in 1996 spent nearly 200 fewer hours annually on the job than did his counterpart in 1973.  (These data are from W. Michael Cox and Richard Alm, Myths of Rich & Poor (1999), Table 3.1, page 55.)

Today, diapers are disposable.

Today I can google.

…..

Sure, I’m happy that I live today with today’s income – but,
again, if forced to choose between living in 1967 (or 1973) with today’s higher
income and living today with 1967’s (or 1973’s) lower income, I wouldn’t
hesitate for as much as a nano-second to choose living today with the lower
income from the past.

And I suspect that most people who reflect on this choice
objectively would choose as I would choose. If I’m correct, then the growth in real dollar income between 1967 (or
1973) and today underestimates the improvements to everyday life brought to us
by economic growth during the past 30 or 40 years.

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