The second point is that the black or Toffleresque economy is larger. People aren’t declaring what they earn and are hiding more and more of their assets.

Of course, I only suspect the above but would be curious to see some sort of discussion of the veracity or otherwise of the points.

That’s true only if you use a definition of poverty so narrow as to make it tautological. In the United States, at least, something like 0.2% of the population is homeless at any given time. If we say that 10% of the population is poor, that means that only 2% of poor people are homeless at any given time.

My point was that quality of life is increasing faster at the bottom than at the top because of diminishing marginal returns. The difference between starvation and pasta is much greater than the difference between pasta and lobster. The difference between no car and a cheap car is much greater than the difference between a cheap car and a top-of-the-line car. The difference between a cardboard box and a studio apartment is greater than the difference between a studio and a mansion.

Regarding some of your other points:
-Housing is a special case because the most desirable land will never be cheap. It’s simply not possible to have everyone live in the best neighborhood.
Air travel still isn’t dirt cheap. But it’s much more affordable than it used to be ($500 for a trip to Washington sounds crazy to me unless she had to book it on short notice; I’ve never paid more than $300 round trip from Seattle to New York), and the lowend version (coach) is almost as good as the high-end version (first-class). Actually, that’s pure speculation; I’ve never flown first-class, but I don’t see how it could be that much better.
-Entertainment: Is seeing a movie when it’s new really that much better than seeing it at the dollar theatre, or at home? Is a live event really that much better than listening to or watching something comparable on radio or TV?

Chop your income by 70%, and see what happens.

Take out 30% for taxes and 35% for savings, and I’m almost there. I could make up the other five percent just by getting a roommate.

a bachelor can live large on a salary that a married man with children struggles on.

I’m sure it is (although the heads of most poor families are neither married nor men), which is why one shouldn’t have children until one can afford them. But my contention is only that quality of life has improved faster for people at the bottom than for people at the top, not that everything’s just dandy for people at the bottom.

Food is one of those expenses that people will pare to the bone because it is more elastic than housing or energy. So rather than get kicked out of the apartment or have the utilities turned off in bad weather people cut back on eating. And pawning the TV won’t bring in enough to make a difference.

Suppose there are two groups of people in the economy, say those with and without a college education. Within each group, everyone gets the same long-run income, but there are variations from year to year.

If you take a sample of incomes in a given year, the variance will arise from two sources
(i) the difference between the two groups
(ii) the year-to-year variations within the groups.

In the absence of credit or savings, consumption equals income so the two have the same variance.

Now suppose you introduce credit markets, so people whose income is temporarily (they hope) low can borrow and maintain their average level of consumption, paying back the debt in a year when their income is above its long-term average. This means that the variance (inequality) of consumption declines, even though the long-term difference between the groups is unchanged as is the variance of income.

What has actually happened is that both kinds of income variation have increased, but the use of credit has also grown. As far as measures of the inequality of consumption in any given year are concerned, the two effects more or less cancel out.

The big relative price movements have been down for manufactured goods and up for skilled-labor-intensive services.

Thanks for proving my point, Slocum. It all depends on what your definition of “hungry” is.

Poverty advocates continue to emphasize issues like ‘hunger’ and ‘warm coats’, I think, because these things are traditional and visceral.

And as I pointed out, in New York City alone, tens of thousands of “warm coats” are collected and distributed every year to people who presumably would otherwise not have a “warm coat.”

Kvetch, I think started that part of the thread, and that’s not what I arguing.

It is precisely what you’re arguing, Slocum. You’re arguing that poverty used to mean “not having access to the basic necessities like food, clothing, and shelter,” but that today it means “having to drive an unreliable car. I’ve provided two examples that suggest that there are still people in this country who lack the basic necessities, and still you go on waving that notion away as “fiction.”

It’s all in keeping with you standard MO here, which is to pounce on any suggestion that life in these United States is not only perfect, but getting perfecter by the day. I’m not interested in having that discussion one more time with you.

Kvetch, I think started that part of the thread, and that’s not what I arguing. What I’m saying is that poor and lower-middle-class life (and the differences between rich and poor) are qualitatively different than a generation or two ago—then, ‘stuff’ was expensive and people in lower and middle classes went without many ‘luxury’ items which are now very much cheaper and all but universal. And that this change affects people’s intuitive sense of inequality. So being disadvantaged now doesn’t mean you don’t have a warm coat (or, generally speaking, air-conditioning, microwave, color TV, DVD player, car) and it doesn’t mean not having enough calories, but it may mean that you tend to have long commute in an unreliable car to an unpleasant job with marginal benefits, and that your kids attend an underperforming school. And you are far more likely to suffer from obesity (and obesity-related health problems) than hunger.

From a USDA report on “food security” in the US:

The problem with the term ‘food insecurity’ is it is intended to suggest ‘doesn’t know where the next meal is coming from’ whereas if check the definition, it includes things like not having convenient access to nutritious, low-cost foods (which is the situation for many inner-city residents, and it’s a real problem, but it ain’t famine—what they need is a Wal-Mart nearby, but that’s another argument).

As for genuine hunger—how many kids are there in the U.S. who are undersized because of long-term lack of calories? Except for the ones with insane parents who are found to have kept them locked in a closet, the answer is essentially none.

Poverty advocates continue to emphasize issues like ‘hunger’ and ‘warm coats’, I think, because these things are traditional and visceral. But even so, strategically, I think it’s a mistake because those aren’t the issues and people realize that they’re being deceived (as with John Edwards’s fictional shivering girl). Better to base appeals on the real problems of the disadvantaged.

I’ve been to two local thrift stores recently, and to a few new clothing stores (Sears, Mervyn’s, lower-middle class at the highest). There’s a huge difference in the quality, functionality and looks of the clothing.

Heh. Barry,—I buy a lot of my clothes at Mervyn’s. Can I claim to be lower-middle class at best? ;) Seriously, I don’t care about the logo, don’t like being ripped off, and find that Mervyn’s clothing looks and holds up just fine (the ‘falls aparts’ argument strikes me as a rationalization for people who want to be able to tell themselves they’re buying more expensive brands for ‘practical’ reasons).

Entertainment – can you casually spring for $9 for a movie ticket, or are you waiting for the dollar theater?

Dollar theater? No, I tend to wait for the DVD. Not because I couldn’t casually spring for $9 movie tickets, but because it seems like a waste of money. (My teenaged kids, on the other hand, don’t think twice about going to the movies, and naturally they’re almost always broke).

(1) the wrong markers of consumption inequality are being used

or

(2) a direct comparison is not being made between 1970 and 2005. Instead, a comparison is being made between, say, 1969/1970/1971 vs. 2004/2005/2006 and the relative inequality across the former period looks similar to the relative inequality across the latter period, but due to very different underlying causes

or

(3) I am missing something because I just don’t get it in some basic way.

all seem equally possible—anyone willing to give explaining another go?

Furnishings – there is a big difference between choosing to live spartanly, presumably with things that you want, and which work well, and having to live with worn, ugly, unserviceable stuff. For example, does ‘spartan’, in your case, mean not having hot water to shower in, frequently? Occasionally throwing out food because the refrigerator doesn’t work well? Having a couch which earned its retirement well before you got it, and which is dirty and saggy?

Housing – declaring it a ‘special case’ exempts something which is the major cost in most people’s budgets. And the zero-sumness does make for greater consumption equality, but rather greater consumption inequality.

“You can get decent clothes cheaply, especially if you go to a thrift store. I’m not sure what you mean about travel and entertainment.”

One can get certain serviceable clothing at a thrift store, for some items. I’ve been to two local thrift stores recently, and to a few new clothing stores (Sears, Mervyn’s, lower-middle class at the highest). There’s a huge difference in the quality, functionality and looks of the clothing. Not to mention getting your size immediately, rather than after several weeks of combing the racks.

Travel and entertainment – why don’t you understand what I mean? I have a friend arranging a trip to DC, for a job interview. The airline trip will cost $500, and that’s a major sum for her; it hurt her. For me, that’s one month of being truly thrifty, or two months of not being a spendthrift.

Entertainment – can you casually spring for $9 for a movie ticket, or are you waiting for the dollar theater? Is a $50 ticket/admission to some event a minor expense, or prohibitive? Can you casually take off for a weekend trip, or are you working on the weekend, because you need the overtime, and your car isn’t up to it, and you can’t afford to spend an extra $100?

“Cars, I’m not so sure. I had a similar experience with the first car I bought, but if you’re always having to pour money into it, then it’s not really cheaper. Also, I gather that cars have gotten a lot more reliable recently. I don’t think that a top-of-the-line new car (say, $50,000) is that much better than a $6,000 used car. They both get you where you’re going, and everything else is gravy.”

Ah, a $6,000 used car – for many people, they can’t afford that. Of if they do, they have to drive it for 5 years or more, and by then it’s a certifiable junker. As to getting you where you’re going, I used to have regular breakdowns, towing and stranding, until I got a much nicer job, and could afford a decent car. In the past 10 years, I’ve not been stranded by a breakdown at all. The 10 years before that, it was at least once a year, and maybe twice.

“I spend only about half my after-tax income, and I can’t imagine that my life would be appreciably better if I spent the other half on a bigger apartment, a nicer car, better clothes, or anything like that. Pretty girls, maybe. But none of the other things.”

Chop your income by 70%, and see what happens. And from your posts, I gather that you’re not married, and don’t have any children. That’s a major set of expenses that you don’t have; a bachelor can live large on a salary that a married man with children struggles on.

So, to a great extent, a “good school district” is one that is populated entirely by rich families. This means that the more expensive a house is, the more desirable it is, independent of any other feature about it. (Of course, what really matters is prices district-wide, but those also are strongly correlated.)

Wasn’t it Marginal Revolution that just had an item about demand curves sloping upward, with everyone pointing out how impossible that was?

From a USDA report on “food security” in the US:

Eighty-eight percent of American households were food secure throughout the entire year 2004. The prevalence of food insecurity was 11.9 percent in 2004, up from 11.2 percent in 2003. The prevalence of food insecurity with hunger was 3.9 percent in 2004, up from 3.5 percent in 2003.

So, is 3.9 percent a negligible figure for the purposes of this discussion? Or is the USDA lying? Or is somebody going to chime in with an explanation of how “hunger” doesn’t mean what it did 50 or 100 years ago? I eagerly await some clarification on this.