Tuesday, August 28, 2007

Overwhelming Evidence III: Good Old Days Are Now

A century ago, the typical American household spent almost half of its income on food (46.4%, see chart above, click to enlarge), 14.7% on clothing and 15.1% on shelter, for a total of 76.2% on food, shelter and clothing in 1901, according to the Federal Reserve. As a result of significantly increasing incomes and declining real costs for food and clothing, the average American household today spends only 14% of its income on food, 5.3% on clothing and 18.4% on housing, for a total of 37.7% spent on food, clothing and shelter (see chart above).

By comparison, The Economist today reports that the typical household in India today spends 46% of its income on just food, which is more than the typical American household spends on food AND clothing AND shelter (as a share of income)! And the average Chinese household spends almost as much on food (33%) as the average American household spends on food, clothing and shelter.

This example provides more evidence that despite what many people think, our standard of living is higher now than ever before, and helps to illustrate the widespread "abundance denial" in America: Even though our standard of living has increased dramatically over the last century, and even though the typical American household has never had it so good, and even though the average American's standard of living is significantly better than almost anywhere else on the planet, and even though wealth, prosperity and abundance for the AVERAGE person is at an all-time historical high, "the media constantly dwell on minor problems without celebrating the broader, more upbeat context in which they exist."


At 9/03/2007 12:36 PM, Blogger Adventures In Money Making said...

we might have a better standard of living than someone in a country where nearly 30% of the population lives in poverty. Thats nearly 400 million people or MORE than the US's entire population!!!!

That doesn't look like an apples to apples comparison.

Also, I wouldn't believe anything the government publishes anymore. I think the average person in the US spends about 25-30% on housing (although houses have become bigger and much more comfortable from 1901!). Most of the US population lives on the coasts where housing is very expensive.

Of course, another to make these number better is to consider that the average family had only 1 working member in 1901 - the male head of household.

Today you have most family with 2 income earners. So two people are now working, but they're not living twice as well.

That doesn't sound like an improvement to me.

At 11/14/2007 9:07 AM, Anonymous Anonymous said...

I don't think so. You left out the fact that in 1901 there were no or very low property, income, or social security taxes.


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