To consider the possible future of the Australian economy, particularly if the current government stays in office, we should look at the US. One of the striking features of US economic data is that, at least on its face, it shows that most measures of median income (wage rates, household incomes and so on) haven’t changed much in the past thirty years. Here’s a fairly typical example, reporting that American men in their 30s have, on average, lower wages than their fathers did at the same age. Median household income did a bit better in the decades after 1970, because of greater labour force participation by women, but hasn’t shown any any clear increase since about 2000. Average household size may have decreased a little bit. In summary, the general evidence is that the average (median) American depending on labour income hasn’t seen a significant improvement in real income for a long time.
That doesn’t seem to square with casual observation suggesting that consumption of most things by most people has gone up. Of course, savings have declined, but that can scarcely be the whole story. An obvious implication of declining incomes is that, if consumption of some things has gone up, consumption of others must have gone down. This is all the more so, given that there are new items of consumption (computers, for example) that didn’t even exist a few decades go, leaving less for expenditure on goods and services that were available then.
So, I’m always on the lookout for examples suggesting that consumption of some category of good or service has declined in real, quality adjusted terms.
Here’s one example I’ve found. According to the NYT, Americans have worse teeth now than a decade ago.
I’d be interested to know how fluoridation has affected this. My guess is that there was an expansion in the postwar years leading to a “free” (that is, no direct cost to households) improvement in dental health, but that there hasn’t been much change recently. Also guessing, I’d imagine that what’s true of dental health is true of lots of chronic, but not life-threatening health conditions. With declining coverage of private health insurance and tighter conditions for public provisions, a lot of these conditions must be going untreated. Then there’s the striking fact that Europeans are getting taller while Americans are not This seems to be true right up the class spectrum, so a simple explanation based on access to health care and dietary info is problematic. Still, it seems reasonable to put down non-critical health care as a likely example of declining real median consumption in the US.
This Boston Review piece by Elizabeth Warren and Amelia Tyagi pointed out by Kjohnson in comments, has lots of interesting info, particularly with respect to housing, where median house size hasn’t increased nearly as much as popular discussion suggests. There’s also the huge growth in manufactured homes (aka trailers) to take into account.
Of course, that still leaves plenty of categories where median consumption is increasing. There’s enough here to keep us going for quite a while. Thanks to commenters who’ve already helped.
John Quiggin 