Bad teeth

by John Q on October 17, 2007

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 recent decades. 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, but the effect is not large. 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 provision, 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.

Overall, 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 in comments at my blog, 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.

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10.18.07 at 11:06 pm



stostosto 10.17.07 at 10:21 pm

Great post. I’ve been marveling at the stagnant American median income as well. Especially in light of overall quite healthy economic growth. Which, of course, is another way of saying that income inequality has dramatically and monotonically increased over the last two-three decades.


Joshua Holmes 10.17.07 at 10:33 pm

Here’s one example I’ve found. According to the NYT, Americans have worse teeth now than a decade ago.

That isn’t a surprise. Americans are growing fatter, as well. The same foods that lead to poor body health also lead to poor dental health. Brushing and flouridated water can’t help you if you eat junk. Also, the positive effects of flouridated water are overblown.

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.

Height has both nutritional and dietary components. Our diet has definitely been worsening, but also, “American” is much more nebulous a genetic concept than “Dutch”. It would be more useful to compare the height of Americans of different ethnicities with their home countries: Irish Americans to Ireland, Italian Americans to Italy, black Americans to Western Africa (understanding that this is a weaker relationship), etc.


Down and Out of Sài Gòn 10.17.07 at 11:16 pm

John: reading the article, the unhealthy state of American teeth seems to be a result of closed-shop workplaces, courtesy of the American Dental Union Bosses Association:

Despite the rise in dental problems, state boards of dentists and the American Dental Association, the main lobbying group for dentists, have fought efforts to use dental hygienists and other non-dentists to provide basic care to people who do not have access to dentists.

Or is income inequality correlated with unhealthy levels of lobbying? I’d accept that.


yoyo 10.18.07 at 12:51 am

What about increased consumption of sugary foods?


tom s. 10.18.07 at 1:01 am

Malcolm Gladwell is so popular that he’s become uncool. But the guy is popular for a reason – he tells great stories and has an eye for the right topic. He addressed this a couple of years ago in The Moral Hazard Myth.


tom s. 10.18.07 at 1:03 am

I wonder about education too. My own experience (in Canada) is that my children will get a worse university education than I did at greater cost. But then far more students are going to university, so maybe that compensates?


David Feldman 10.18.07 at 1:05 am

If one accepts that most American families now
require two working parents to approximate
the standard of living a family decades back
could afford with one working parent, then
one can reasonably suppose that overall
dental health suffers from general neglect
due to general busyness. The neglect probably
affects both the daily hygiene regimen and
and regular connection with dental professionals.


Paul A. 10.18.07 at 1:17 am

The cost of food has declined precipitously over the past 30 years. I read somewhere that it has gone from close to 20% of household spending down to around 11% today. There could be your reason for identifying more consumption with the same or less income.


Bloix 10.18.07 at 1:22 am

Immigration from Mexcio and Central America would be expected to reduce average height.


paul 10.18.07 at 1:49 am

@7: I’m not sure that height or its lack is so readily attributed to genetics. The original colonists were surprised at the height of the natives and there are some accounts that the natives found their visitors to be short and a bit unclean/smelly.

@3: insurance has a lot to do with this: preventive dental care is something many do without if they have to shell out their own money. We’re going through a round of catch-up on stuff in my house right now. What is insurance if not using the bargaining power of a pool to get prices down? Not in the pool? Pay full fare.

@4: meet 2 . . .


sara 10.18.07 at 1:54 am

On the American height issue, I saw the original article and recall that the study tried to keep ethnic factors as similar as possible (surveying Americans of Northern European descent).


Kimmitt 10.18.07 at 1:57 am

Food — especially bad food — keeps getting cheaper, so we may have increased real consumption with decreased expenditures.

The same applies to information.


John Faughnan 10.18.07 at 3:40 am

Thanks for commenting on the manufactured home growth. I’m surprised this doesn’t get more attention.

If you start looking for “trailer parks” pretty soon you find far more of them than you ever dreamed was possible.


roger 10.18.07 at 3:56 am

The NYT article is pretty clear about the fact that more cavities are being left untreated. “Being left untreated” doesn’t have to do with what you eat, but does have to do with what you will pay to go to the dentist to treat you.

A few years ago, in his book, The Working Poor, Invisible in America, David Shipler pointed out that among the poor, dental health care has declined dramatically.

Of course, nobody gives a shit about the working poor, between the two of them the Reps and Dems will do nothing to either break the lock of the Dental Union on the amount of dentists or what dental hygienists are legally allowed to do or provide any kind of national health solution, and we will just keep drifting. Because there are no solutions in America, just spin, decline, and waiting for foreseeable disasters. The country seems to have lost its ability to solve any of its problems.


Gene O'Grady 10.18.07 at 4:06 am

This may not be the kind of thing the post is looking for, but my experience certainly is that activities involving parents and children have certainly gone way back in the fifty plus years I’ve been watching. Are vacations consumption? Part, but only part, of this is a question of personal preference.


Thomas 10.18.07 at 5:13 am

Roger, I haven’t seen the underlying study, but the “left untreated” piece obviously isn’t entirely unrelated to the incidence of cavities–if the latter increases while treatment holds steady, then you’ve got an increase in the number of cavities left untreated. I don’t think that’s the source. In fact, I think you’ve identified the problem (supply), if not the solution (supply).

John, don’t the numbers you cite (household income, wages) at the beginning leave out most health care spending (provided through employer-sponsored private health insurance or through public health spending)? Hasn’t spending on health care skyrocketed? The figures I’ve seen say that health care spending has moved from 7.4% of US GDP to over 15%. How do you account for this consumption (and how do the income stats)? Are you suggesting that most health care spending is for “life threatening health conditions”? That’d surprise me, because it is entirely inconsistent with my experience, but I’m open to persuasion. Is your suggestion that this skyrocketing health care spending (if that’s accurate) isn’t spending that benefits the median household/median wage earner–that health care for the median American is declining while health care spending increases? (Is your complaint one about quality–that spending has increased, but hasn’t purchased the same, much less increased, quality?)


a 10.18.07 at 5:57 am

What is the single item that Americans consume less of? Leisure time.


luci 10.18.07 at 6:21 am

“most measures of median income haven’t changed much in recent decades. […] That doesn’t seem to square with casual observation suggesting that consumption of most things by most people has gone up.”

If examples of goods where consumption has gone down can’t be found, wouldn’t it seem to indicate that the hedonic adjustments are missing something? And inflation is overstated?

I think the median wage earner making ~40k today is relatively poorer than he was in 1970, as compared to those above them in the upper brackets. But it does seem that the median wage can buy more than it could in 1970, in spite of the numbers indicating stagnant wages, after the inflation adjustment.

There are all kinds of new products, and improved goods available now that weren’t around in 1970. Seems possible the hedonic adjustments have understated the advancements in, say, electronics, and that comparable goods prices should have been falling faster.

And could the shift to much more cheap imports from Asia during this time make the GDP-deflator calculation fishy? The OECD says “a decrease in the price of imports is added to the GDP deflator (resulting in higher domestic inflation) although such a decrease may still lead to price deflation when the lower-priced imports are incorporated into domestically produced goods.”

All of this would mean that inflation was overstated, and growth for the median wage is actually higher, not stagnant for the past 30 years. Which sounds crazy. Personally, I usually feel that inflation must be understated, and hedonic adjustments overstate GDP growth.


sharon 10.18.07 at 7:08 am

It may be that men’s wages are lower than their fathers’ 30 years ago, but surely we also need to be comparing household incomes and taking women’s wages into consideration? Aren’t there far more dual-income households now than a generation ago?

(Also, what other people said about the prices of basic necessities like food, and clothes.)


sharon 10.18.07 at 7:10 am

Sorry, re-read the first paragraph and realised that it did say something about that issue already. Always risky skimming blog posts first thing in the morning before I’ve woken up properly; reading skills are even worse than usual. (Although I still find it hard to believe it doesn’t make that much difference.)


reason 10.18.07 at 8:13 am

I’m seriously curious as to why John Quiggin thinks the decline in savings is not the key issue here. Hell I’m 52 and have two young children and are just debt free. My father had 5 children and was debt free much earlier. (By the way of course that is another ignored issue – family size).


reason 10.18.07 at 8:14 am

I’m old enough to remember when older people were mostly very poor (in Australia when increases in the basic pension were a big deal). I think those days are coming back!


reason 10.18.07 at 8:17 am

And if you are looking for quality adjusted declines just look at medicine – I can remember house visits! I can remember service in Banks (without charges)! I can remember when getting anywhere didn’t take forever!


Tim Worstall 10.18.07 at 8:52 am

Re dentistry. It’s a service, so we’d expect it to become more expensive relative to manufactures, wouldn’t we? (John, your post on the “Baumol Effect” is still number 2 on Google for that phrase.)
So as something becomes relatively more expensive, wouldn’t we expect people to consume less of it?


SG 10.18.07 at 9:01 am


If the median income is not rising, we don’t expect services to get more expensive do we? And if the inflation-adjusted growth in median incomes is steady, we should expect that services become less expensive or stay the same over time. Inability to access services should be telling us that something is wrong.

I don’t believe this stuff about food being cheaper either. I eat fresh fruit and vegetables, fish and small amounts of dairy, with limited amounts of processed food. I have watched those prices skyrocket in Australia over the last 10 years. The World Food Program just released a report saying food prices have risen 50% in 6 months. So I don’t believe that stuff about food.


abb1 10.18.07 at 9:11 am

Maybe they are just consuming more stuff that’s more junky than it used to be. Plastic bottles, plastic cars, vinyl siding, particleboard furniture, freaky food, junky entertainment, junky news coverage.


stostosto 10.18.07 at 10:57 am

Tangentially to this subject, has there been any mention here of Garrison America?

Apparently, fully one fourth of the American labour force is occupied in “Guard labor” jobs. Monitoring the distribution of wealth rather than creating it. (And they don’t even count lawyers in that figure, as best I can see – nor prison inmates, but of course their guards…).


soru 10.18.07 at 11:51 am

‘we don’t expect services to get more expensive do we?’

We would for those services provided by people above median income, like dentists.

I suspect it would be a lot more useful to stop talking about arbitrary quantitative data points like ‘median income’ and break things up into good old-fashioned qualitative distinctions:socioeconomic clases. Otherwise, you can’t distinguish between the change in size of different classes and the change in prosperity of typical members of that class.


P O'Neill 10.18.07 at 12:42 pm

I think it’s impossible to tell a story about consumption patterns with apparently stagnant median income without talking about immigration. Families have boosted their incomes by sending the spouse to work. This has only been possible with relatively cheap child care, purchased-in food, and all the other services that the spouse used to do in-home. And who does all these tasks now? Low wage immigrants. Who are still better off than they would be at home. So some of the burden has been spread by a Pareto-improving reallocation of the global labour force.


Michael Samuels 10.18.07 at 12:45 pm

Here’s a mixed blessing: the new HIPPA laws allow for your employer to set up ‘Wellness Programs’ that in effect penalize those who don’t take part. If your employer sees that you have bad teeth and munching candy all day, you can be charged more on your premium for not taking care of yourself. The bad news is that it brings about all sorts of privacy invasion issues. There’s an interesting video running on YouTube called ‘The Raymond Report’. You can search it or go to their website:

The guy is a health insurance veteran that has set up the web show to help consumers with their problems and I’d be interested what he has to say on the subject. He does make a big issue of these new HIPPA laws that most people don’t know about.


Ragout 10.18.07 at 1:03 pm

It’s a rather mundane example, but for decades now, there’s been a downward trend in movie attendance, as people stay home and watch TV.


john somer 10.18.07 at 1:20 pm

A good source for critical analysis of US statistics is Michael Hodges “Grandfathere Eonomic Report” which debunks most of the government’s statistics


Rich B. 10.18.07 at 2:03 pm

Less spending on children (because people are having fewer) is certainly one area.

But beyond that, I am curious how inflation numbers take into account greater price disparities than I recall from 20-30 years ago.

Back in the early 1980s, it was not uncommon for me to buy an item full price from Barnes & Noble (well, B. Dalton or Waldenbooks, then). Now, many people still pay full price — I see them on line while I’m sitting in the cafe — but lots more get 30% off on the internet, or buy it used on eBay, or have some other mechanism for deep discounting.

If one third of the people pay $50 for the DVD box-set at Borders, one third pay $35 on Amazon, and one third download a pirated copy for free through a file sharing service, I’m not sure how a measure of inflation does (or even should) consider the “cost” of the item. Whatever “inflation” says is the real cost, lots of people are paying less than that.


Jon H 10.18.07 at 2:24 pm

“I’d be interested to know how fluoridation has affected this.”

I’d guess it’s due to increased intake of sugary acidic drinks. It might also be due to kids having their ‘teeth sealed’, and the sealant products not actually providing as much protection as the parents expect. Then the parents think their kids’ teeth is invincible, and they slack off on dental care and avoiding sweets.


Jon H 10.18.07 at 2:25 pm

” I eat fresh fruit and vegetables, fish and small amounts of dairy, with limited amounts of processed food. I have watched those prices skyrocket in Australia over the last 10 years. ”

That’s because you’re in Australia and they have to weed out the deadly poisonous vegetables, fruit, fish, and dairy.


SamChevre 10.18.07 at 2:26 pm

I think 2 big items which are consumed less would be “leisure” and time-with-children. (Leisure in quotes, because I’m not certain that a stay-at-home mother is experiencing anything I’d recognize as leisure.)


reason 10.18.07 at 2:40 pm

Re price indexes, I think it is very difficult making quality adjusted comparisons, because relative prices have changed so much. You see it used to be that fridges, stoves etc were a big deal to buy. Now they are cheap (the cost of a family night out in a good restaurant). You don’t repair them when they have problems (and often you CAN’T repair them because the parts don’t exist), you throw them out. But we still only ever USE one fridge and one stove, it is just that we buy more of them and repair them less. Furniture is also like that, and clothes. It seems to me that relative prices have moved against the things that families really need (like land, education, medicine etc) and for the things that singles might like, but maybe as I have young children I’m biased.

But I’m inclined to think anyway that looking at the big aggregate statistics is always going to blind you to what is really going on. The devil is in the details.


Slocum 10.18.07 at 3:15 pm

Hmmm — let’s see if we can spot the sleight of hand in the Warren and Tyagi piece:

“In fact, the size and amenities of the average middle-class family home have increased only modestly. The median owner-occupied home grew from 5.7 rooms in 1975 to 6.1 rooms in the late 1990s—an increase of less than half of a room in more than two decades.”

What’s the problem? We don’t want to know how many rooms, we want to know how many square feet. And we don’t even want to know square feet per house, we want to know square feet per person, for example:

I grew up in a family of six (during the 1970s) in brick ranch with 1200 sq feet (later expanded by a couple hundred more) — or about half the space per person that the average poor American now has. And we were solidly middle class (college educated parents, dad had a white-collar job).

This trend in increased space has meant kids sharing bedrooms has become rare enough to be notable as an exception:

With respect to dentistry, it sounds like the problem is similar to that in the UK — namely that poor people can’t find dentists who will accept their government insurance plan:

In general, people who live in the U.S. and are old enough to remember the 1970s are perfectly aware the improvements in living standards between then and now, but it may be possible to convince people outside the U.S. that things are stagnating here (and suppose there’s some political advantage in doing so).


Neil B. 10.18.07 at 3:34 pm

A major reason people can buy lots of stuff even though they don’t have much money now: discount stores. Housing, school, energy, medical etc. rose but the price of any given piece of junk went down, so the overall CPI didn’t go up very much. It’s not such great stuff, but you can get decent reading or sunglasses for $1-2, or tools, junk food etc. What they’re “buying” less of is the savings they’ll need for later. Even more important: why are wages stagnant, with productivity good, anyway? It doesn’t take a genius …


cm 10.18.07 at 4:16 pm

reason: My ex-landlords had a full-size “walk in” second fridge in the garage. It was quite possibly their old fridge when they bought a new one, presumably using my rent money!


cm 10.18.07 at 4:26 pm

Combining reason’s comment #23 with other on “leisure time”, one thing that is quite plausibly dropped from “quality adjustments” is the customer’s time spent on various overheads, including parts of the business process unloaded on them, or simply waiting to be helped by understaffed crews.

Another “down” category is competent in-person product support and customer interface, replaced by online FAQs or web forms which are sufficient if you know exactly what you are looking for, or what you are looking for is covered by the options, but no questions please. (And of course you need broadband internet access …)

The lack of support is probably one of the nails in the toss-and-replace coffin.


Nick 10.18.07 at 4:35 pm

re:slocum #38

That Globe and Mail article also practices some sleight of hand when it compares the living space of poor Americans to that of the average person living in London, Paris, Vienna, or Munich. I’ll bet the average poor American also has more living space than the average high income Yuppie inhabitant of NYC, because the average poor American doesn’t live in an expensive high density city.

That said, My family and I just moved out of our first house, a 1978 vintage 3 bedroom house that gave us 467 sq ft per person. According to the Globe and Mail article, that’s pretty close to the average living space for poor Americans, but it felt much more spacious than the solidly middle class homes owned by my relatives in nondescript parts of the UK (larger closets, wider hallways, etc).

We moved into a new 2006 home that was probably targeted at almost exactly the same demographic as our original home when it was new. The 2006 home has two additional rooms, larger kitchen, wider hallways, bigger closets, much better wiring, better insulation, and some nice touches like passive solar layout and solar hot water. It’s a veritable mansion compared to housing I’ve seen (and inhabited) in Europe.


Watson Aname 10.18.07 at 4:53 pm

38/42: I really don’t believe that livingspace/person can be considered a strictly increasing measure for standard of living. Below a certain point, it definitely reduces your quality of life. On the other hand, there are seriously diminishing returns on the other end, and a trend in parts of north america towards large poorly built houses (with cheap materials) on small lots demonstrates there are aspects of the increase in housing space that are more self-defeating status markers than actual quality of life.


Nick 10.18.07 at 5:33 pm

watson #43:

I certainly agree that living space alone isn’t a good measure of standard of living. I also suspect that the point at which space limits do affect quality of life is both personally and culturally variable.

However, I don’t agree that a large house on small lots is necessarily a self defeating status symbol. While I and my wife personally prefer a larger lot, lots of people don’t like to garden. For them, a large house on a smaller lot probably makes more sense with regard to quality of life (and I’d go for a big house on a small lot before a small house on a small lot). Internal layout is probably a better indicator of a house that enhances standard of living versus one that is a status symbol.

I suspect that even cheap modern houses are more energy efficient than a house built before the 1980s. That’s definitely been my experience moving from a 1978 house to a 2006 house, and my parents found the same thing when they moved from a 1960s tract house to a 1990s tract house. For me, lack of draughts and a smaller heating bill is also a quality of life issue, and quite frankly, our new house exhibits better workmanship than the one built at the height of the Jimmy Carter malaise.


Sebastian Holsclaw 10.18.07 at 5:34 pm

“What is the single item that Americans consume less of? Leisure time.”

Is that true? this suggests that non-supervisory work hours are down over the past 35 years.

“Another “down” category is competent in-person product support and customer interface, replaced by online FAQs or web forms which are sufficient if you know exactly what you are looking for, or what you are looking for is covered by the options, but no questions please.”

This isn’t true at all. What is true is that you can’t get such support at discount store prices.

“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.”

I guess I don’t understand the underlying premise of the question. Isn’t it possible that almost everything has gotten so much cheaper that median income could be static, but what it buys is much better than what it bought in 1970?

For almost all of the large expenditures that a middle class family would want to buy in 1970 (a washer, dryer, automobile, stove, oven), they can be purchased now for better quality and less money than was available then. Then there are things that were luxuries (microwaves, cell phones) that can practically be picked up for pennies. Then there are things that couldn’t have been had for any price (personal computers, personal portable music players) that can be had for much less money than the price of a 1970s washer. Then there are technology improvements–how much would someone have to pay you, to restrict you to gold plated medical care from 1970?

Most of the things that have reduced consumption would be things that have just been completely outclassed–8 tracks, tape players, etc.


roger 10.18.07 at 6:10 pm

Thomas, cavities are not filled on a one to one basis – for every cavity, a dental visit. Dentists can fill one or more in a dental visit. So an increase in the number of cavities could well be met by the same number of dental visits. So the question is, is there simply an increase in untreated cavities that goes beyond that which used to be taken care of in a dental visit, or is there an increase in cavities due to less dental visits? The idea that we are eating more sugar now than in 1970 may have some merit, but that we are eating more sugar now than in 1990 seems much less plausible. Plus, of course, the population group most liable to cavities is children, and there should be less children now than in the hind end of the baby boom years as a percentage of the population.

Now, as the article suggested, one reason for the increasing cost is a decreasing labor supply as a a service. So the explanation that the service has more money thrown at it as we all get wealthier, which is why it is more expensive, only makes sense if we accept the labor bottleneck as natural. But we only accept that rule for medicine. We’d expect that, in the nature of things, more people would be attracted to a service in which they could make dentist’s money, and that the influx of more dentists would cause the cost to go down. We would also expect changes in job description over the last fifty years. Technology should make it easier for people with a lower level of dental training to apply those skills to their clients pearly whites than was the case in an era when dentristy involved a lot of tacit knowledge. However, they are prevented by law from doing so – and of course, the strangehold on the law is implemented by dentists.

It is part of the absurdity of American conservatism to defend both monopolistic practices that favor the wealthy – thus undermining capitalism – and socialistic schemes to have the state underwrite services – again, favoring the wealthy. In other words, they favor the wealthy regardless of the perfomance of the system. This is why we have such a unique health care system in America, and why conservatives are always urging us to be proud that Americans pay more for medicine than anywhere else, as we are ‘helping R and D’. It is a beautiful way of combining the worst of socialism and the worst of capitalism to get – well, that sack of horse manure which was Tom Delay’s ruling philosophy, and is Bush’s too.


Watson Aname 10.18.07 at 6:11 pm

nick in #44 : I agree that ratio of house/lot size isn’t inherently telling you much of anything. I was however thinking specifically of the effect on the outskirts of serveral large metro areas, where `upscale’ developments which relied on square footage (often badly designed, so a lot of space is wasted) to differentiate them have been surrounded by a sea of the same, so any initial status implications are long gone. This is what I meant by self-defeating. Building on small & cheap lots and relying on large footprints is easily reproduceable, hence self defeating since any success you have in status branding will encourage duplication near by.

Certainly energy efficiency improvements have been made mostly across the board. I don’t know if that completely counteracts the increase in air space heated/cooled, but it might.


c.l. ball 10.18.07 at 6:18 pm

As Warren & Tyagi point out, housing costs have risen but not necessarily because most middle-income people are buying larger houses — rather demand for housing in locations w/ good schools has driven up housing prices, and even middle-income people will pay more for better schools, more than they should.

W&T also argue that after housing, healthcare, a 2nd, and higher tax rates (due to dual-income families) mean that middle-income persons are less able to save and more likely to take on debt. With dual-incomes and kids in daycare, two cars is mandatory, not a luxury, unless you are fortunate enough to have excellent public transport, or proximity to work or co-workers.

As W&T argue, it is a myth that Americans, especially middle-income ones, are consuming more than they can afford on luxury goods. Let’s face it, if your iPod Nano lasted only a year, it cost $0.41 per day. A pair of Nikes of year would cost less than that. That consumption may be conspicuous, but it costs far less than a month’s mortgage payments.


c.l. ball 10.18.07 at 6:19 pm

The 1st sentence of the 2nd graf in #47, should read: W&T also argue that after housing, healthcare, a 2nd car, and higher tax rates (due to dual-income families) mean that middle-income persons are less able to save and more likely to take on debt.


Thomas 10.18.07 at 7:04 pm

Roger, I don’t take the supply of dentists to be natural in any sense. I do disagree about a couple of things. First, in our current regulated system, it isn’t enough for more people to want to become dentists; there must be schools to train them. And in recent years, schools (particularly private schools) were closing, not opening. So the increasing returns to the training likely means that it now requires better qualifications (in some academic sense) to become a dentist, not that there are or will be more dentists. Second, the strangehold on the law isn’t implemented by dentists, but by state governments. Many of those state governments are in the hands of folks you might describe as progressive, and DeLay and Bush control none of them. I, for what it’s worth, would favor measures to increase the number of dentists, and would favor measures to allow hygienists and the like to perform more tasks than some states allow them to do. But I am a conservative, and so I could probably be persuaded to support such socialistic schemes as integrating dental care into low-income health clinics and increasing funding for dental care under Medicaid, but only because these help rich dentists.


roger 10.18.07 at 7:50 pm

Thomas, you obviously didn’t read the article in question, or you would see that the diminishment of dental schooling and the archaic rules keeping dental technicians from practicing low level dentistry both flow out of lobbying efforts by the Dental industry. And though the licensing of dentists was progressive in the 1890s, liberalism has, well, changed since the 1890s. If you think the state of Texas or the State of Georgia is merely responding in a kneejerk liberal way to these issues, you obviously have never lived in the state of Georgia or the state of Texas.

However, I think you are a strange conservative, Thomas. Here we have a profession, dentistry, in which the average salary has increased more than the average salary of doctors or lawyers. But, contrary to conservative market theory, the heedless young people of today just don’t wanna be dentists and earn that lucre. Thus, dental schools are folding. Hmm. Could this be the sign of a fixed market? Or are you just saying that free markets, in general, don’t allocate goods and services very well?


dsquared 10.18.07 at 8:49 pm

Baumol effect has to be a red herring here; although it would explain rising prices, for an absolutely lower amount of services to be consumed in response to a manufacturing productivity increase would have to imply some very odd things about preferences.


stostosto 10.18.07 at 8:51 pm


In general, people who live in the U.S. and are old enough to remember the 1970s are perfectly aware the improvements in living standards between then and now, but it may be possible to convince people outside the U.S. that things are stagnating here (and suppose there’s some political advantage in doing so).

It’s your official U.S. government statistics we are talking about here. Median income is well-defined and consistently tracked, both in the U.S. and in other countries.

Have a look at this U.S. Census Bureau report.The table at page 45 gives you median income in 2005 dollars (i.e. CPI adjusted) for Full-Time, Year-Round Workers from 1960 through 2005. It’s astounding.

Median income for male workers stood at $41,259 in 1972. In 2005, it was $41,386. For women the development was a little better with women closing the earnings gap to men somewhat. In 1972 median income for female workers stood at $23,872 while by 2005 it had increased to $31,858 – thereby raising women’s median income from 58 pct. to 77 pct. of that of men.

This female earnings trend of course compounds the effect of a rising female participation rate which Quiggin notes as a factor behind household median income doing a little better than male median income.

Since 2000 female median income has been stagnant too though, which is reflected in the household median income being stagnant as well 2000-2005.

As for “political advantage”, maybe, maybe not. It’s true these numbers would seem to bolster the case for people favouring redistributive policies. But these are the numbers. Deal with them.

Some people here speculate that cheaper prices on this and that, discounts, free downloads etc. may allow for an increasing standard of living in spite of stagnant incomes. But the CPI adjustment is designed to take care of that. This measure is by no means perfect, and it most notably has well-known problems taking account of quality increases. But that was always a problem, and I doubt it has been increasing over time. Thus, the trend (i.e. the stagnation) in median income does reflect something real.


John Quiggin 10.18.07 at 8:55 pm

Following up stostosto, it’s worth pointing out that the US does more quality adjustment than most other countries, following changes made in the 1990s (Boskin commission, IIRC).


John Quiggin 10.18.07 at 9:00 pm

As regards hours, you need to disaggregate by gender, since women’s participation has changed so much and they are far more likely to work full time. Here are some BLS stats.

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.


stostosto 10.18.07 at 9:04 pm

Oh, and there’s a 2007 update on the Census Bureau report I linked above.

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.”


Sebastian Holsclaw 10.18.07 at 11:08 pm

“Some people here speculate that cheaper prices on this and that, discounts, free downloads etc. may allow for an increasing standard of living in spite of stagnant incomes. But the CPI adjustment is designed to take care of that.”

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.


Thomas 10.18.07 at 11:30 pm

Roger, you miss the point. I know who lobbies for the resrictions, but who actually implements the restrictions? Do the restrictions on the practice of dentistry not exist in progressive strongholds like CA, NY, MA? Also, the story on dental schools is a bit more complicated, isn’t it? I mean, at one point private schools (e.g., Northwestern) made a decision that they couldn’t compete financially with public dental schools, because public dental schools received state support for their clinics, while private schools did not. As a (partial) consequence, public school tuitions were lower and private schools found it hard to compete for students. (I say partial because obviously a school with Northwestern’s extensive financial resources had a choice as to how to respond.) My understanding is that the round of closings is over, and that there are dental schools that will soon open. And application volume apparently is up 65% since 2001 (according to the American Dental Education Association), so apparently people do respond to incentives.


SG 10.18.07 at 11:50 pm

The housing-space comparisons are a furphy too. Sure houses are bigger and “better” now, but to my mind that’s not the issue. The issue is that they are relatively less affordable. In Australia, the “average” house has increased from 3 times the average income to 6; in the UK banks are now routinely offering mortgages for 7 times the average wage, not 3. This is not because people want bigger houses, but because housing market speculation has pushed the cost of housing beyond first market entrants.

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.


Bruce Wilder 10.19.07 at 12:45 am

“Overall, it seems reasonable to put down non-critical health care as a likely example of declining real median consumption in the US.”

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.


Thomas 10.19.07 at 4:08 am

stostosto, the census publication you link says:

“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.


Steve 10.19.07 at 4:39 am

So– if I’ve got this argument right– US household income hasn’t gone up much since the 1970s, but Americans have more and cooler stuff; that’s partly because working-age Americans have smaller families (meaning more money to spend on stuff per person), and partly because the stuff is cheaper (or delivers more fun for the same real price). But education and health care and, in many markets, housing are way more expensive, raising the question of how the households with stagnant real incomes can afford all the cool stuff plus all the expensive education and health care.

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?


eudoxis 10.19.07 at 5:50 am

The New York Times reports in a graph that nearly 30% of adults in the US have no teeth. Does anyone read this material before it goes to print? The rest of the article is misleading, though not as egregiously. The author shows a datapoint on a trend, proceeds to call it a trend and has a host of reasons for it.
The CDC reports that, overall, dental health in the US is still improving.


novakant 10.19.07 at 8:03 am

I think one factor that should be taken into account more is savings. When we talk about the size of average person’s house or car, we need to know how much of it he actually owns and how much is owned by the bank. I’m still amazed how people in the UK have no qualms juggling loans, credit cards and mortgages and from what I hear it’s not much different in the US. It seems to work fine for now and actually be better for the economy than people behaving more conservatively in this regard, but I always think that one day the whole system will crash spectacularly and a good chunk of the so-called middle class will be left with nothing.


Nick 10.19.07 at 2:56 pm

sg, #60:

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:


SG 10.20.07 at 1:55 am

nick, they are even soaring in hobart.

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


John Quiggin 10.20.07 at 2:16 am

eudoxis, going to the CDC reports, it’s clear that it should be “adults over 65”. Otherwise, I think the correct interpretation is that CDC was reporting improvements until recently, but the latest data does not support this.


eudoxis 10.21.07 at 3:43 am

“eudoxis, going to the CDC reports, it’s clear that it should be “adults over 65”.

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.

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