Professor Quiggin, one would reasonably expect that to be the case. However, the numbers graphed by the NYT for ‘88-’94 (31%)and ‘99-’02 (25%) are the numbers cited in the 2005 CDC report for adults 60 and over. The number graphed for ‘03-’04 (27%) is cited in the 2007 CDC report for adults 65 and over. They are looking at the same cohort and excluding the younger, healthier seniors.

When house prices are soaring in hobart, the world has gone badly wrong.

Are home prices in Australia overinflated across the board, or only in particular markets?

FWIW, the current Atlantic Monthly has an interesting comparison of different markets in the United States. Apparently, availability and price of housing doesn’t depend solely on pushing out into distant suburbs:

http://www.theatlantic.com/doc/200711/housing

Isn’t part of the answer that we are saving much less, and borrowing more? What’s happened to household savings since the 1970s? And aren’t people now far more likely to borrow against the value of their homes?

“The Current Population Survey (CPS) collects income data for people Data on income collected in the ASEC by the U.S. Census Bureau cover money income received (exclusive of certain money receipts such as capital gains) before payments for personal income taxes, social security, union dues, Medicare deductions, etc. Therefore, money income does not reflect the fact that some families receive noncash benefits, such as food stamps, health benefits, subsidized housing, and goods produced and consumed on the farm. In addition, money income does not reflect the fact that noncash benefits are also received by some nonfarm residents, which often take the form of the use of business transportation and facilities, full or partial payments by business for retirement programs, medical and educational expenses, etc. Data users should consider these elements when comparing income levels.”

The median income numbers you cite from this report exclude noncash income, including, relevantly, increased expenditures on employer-sponsored health insurance. If health care insurance costs to employers have grown faster than inflation (which I believe is the case), then the median income number is misleading in a sense—an increasing percentage of the total compensation package (health insurance) is ignored. There may be good reasons for ignoring this in the ordinary circumstance (I confess I don’t see it, given the size of the benefits involved), but in this context, where we’re discussing income and health care, it seems entirely relevant.

Given the vast increase in the proportion of total resources devoted to health care in the U.S.—not exceeding 15% of GDP, more than in any other developed country—a decline in median consumption of “non-critical” health care would be a bizarre and ironic development.

This is not a mystery either, or some confection of arcane statistics. The debate on this has been raging for 5 years now in Australia, and probably just as long in the UK. In Australia we have had inquiries into how this can be fixed.

Basically, if you have asset-poor parents, unless you can find some holy grail job (or partner) worth more than $100,000 a year, you can wait till you turn 40 to buy a house. Basic goods and services are consuming a large portion of your disposable income, rent is cutting off a lot of the rest, and housing speculation is driving you further and further away from the city while you scrimp and save to find the deposit on a shrinking house. And the “free-market” solution? Release more land on the fringes of already hideously low-density cities, to fuel further speculation while simultaneously telling the poor that if they want to buy a house they can fuck off into the desert.

But once you get it, and mortgage yourself to the hilt forever, you can have a damn fine PC in there for peanuts.

Not really. By the time a good enters the CPI it has already seen an enormous price drop from luxury good to common good. If you don’t think that the access to personal computers for example is a rather large improvement in people’s lives….I’m rather surprised to find you writing in the comments to a blog.

Health care improvements aren’t well tracked at all. As I said above your average worker wouldn’t let you pay them to force them to take only 1970s level medical technology. That fact is tracked as an INCREASE in the cost of medical care, when in fact for any static level of medical care over time you would see a decrease in price.

It says in the introduction: “Real median household income increased between 2005 and 2006 for the second consecutive year.”

But it also has this:

“Earnings represent the largest component of income. Earnings trends and income trends are not perfectly correlated. While median household income in 2006 rose by 0.7 percent, the real median earnings of both men and women who worked full-time, year-round declined between 2005 and 2006 (Table 1 and Figure 2). The median earnings of men declined 1.1 percent to $42,261. The median earnings of women declined 1.2 percent to $32,515. This is the third consecutive year that men and women experienced a decline in earnings.”

Cross-section to be sure, but it doesn’t look as if employed men have improved on the 1960s norm of 40 hours per work and of course women are doing more paid work.