Arnold Kling  

Productivity Measured in Goods

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Mark Perry crunches some numbers.


In 1950, it would have taken almost 8 months of full-time work at the average manufacturing wage to earn the $1,650 needed to purchase the 16 items above at the retail prices in 1950 (or 31.7 weeks, 158.4 days, or 1,267 hours). Today, it would take only 1.6 months of work at the average hourly wage today of $18.01 to earn the $4,580 necessary to purchase those same items at today's retail prices (or 6.4 weeks, 31.8 days or 254.5 hours).

One reason that the new commanding heights are education, health care, and leisure is that durable goods have become so inexpensive to obtain. Thanks to Nick Schulz for the pointer. Nick and I have a forthcoming book (I hope--I'm still waiting to see galleys) that has a lot more of this sort of data.


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CATEGORIES: Growth: Consequences



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The author at Austrian Addiction in a related article titled How good we have it? writes:
    Arnold Kling links to Mark Perry showing off some real term growth figures: In 1950, it would have taken [Tracked on March 6, 2009 11:12 AM]
COMMENTS (11 to date)
Greg Ransom writes:

Note that 2 of the 3 are increasingly socialized.

Any guess when the Democrats and the unions move on leisure?

Arnold wrote:

"the new commanding heights are education, health care, and leisure"

cjc writes:

Baumol Disease, regarding cheaper durable goods but relatively more expensive labor-intensive services?

The Sheep Nazi writes:

Bingo. Of course, the more labor-intensive an industry is the more vote-rich it is, so Greg's explanation and cjc's don't need to be at odds.

El Presidente writes:

Average income is a less reliable statistic for gauging general wellbeing when median income varies significantly. But you know that, right?

Fenn writes:

Fascinating data.

How does this gibe with the fact that in 1950 I could have supported my wife and daughter on one income and now we both have to work college-requiring jobs(and help pay the income of the people my daughter spends much more time with than us)?

This is intended as genuine inquiry, not snarky trolling.

El Presidente writes:

Fenn,

It's a good point, one that some economists would say illustrates the problem of measuring wellbeing in terms of material standard of living.

Arnold Kling writes:

Fenn,
If you are willing to accept 1950 health care, then you can probably still support your family on one income. Also, if you live like a typical household in 1950, your wife and daughter won't have cars, your dwelling will be small and will lack air conditioning, and your electronic entertainment will consist of a radio.

The Sheep Nazi writes:

Well, if we shouldn't be measuring wellbeing in terms of material standard of living, then there isn't much reason to be upset about variations in income, or to argue for redistributing it. But you knew that, right?

El Presidente writes:

The Sheep Nazi,

Well, if we shouldn't be measuring wellbeing in terms of material standard of living, then there isn't much reason to be upset about variations in income, or to argue for redistributing it. But you knew that, right?

I assume that is directed toward me. I didn't say we shouldn't, just that it is an insufficient measure. Supposing we were indifferent to material standard of living in terms of its absolute value (however we choose to measure it), and I don't believe we ought to be, we would still have cause to be interested in its variation amongst individuals, as this changes interpersonal relationships in ways that are consequential and potentially detrimental. If there is more to life than the material (social, cultural, spiritual) and if the material has a relationship to the other things we might want (opportunity cost), then we must still be concerned with the material, if only so that by dealing with it efficiently and prudently we might be more fully engaged with everything else. The questions remain whether we should intervene, when, and how? I am not equipped to answer those questions by myself.

Fenn writes:

Dr. Kling,

Again not to be contentious, but did you not write a book about lack of value in premium health care?

I do appreciate the car my wife and I share, and I occasionally run the AC. I would dearly miss the Internet, but I think I'd trade it and some floor space for the opportunity to raise my child.

I acknowledge there have been gains in the quality of life. But I don't know if they justify a doubling of working hours per household.

And unfortunately my desires seem to be in a significant enough minority that the market does not present me opportunity to trade in one of our incomes for the 1950's lifestyle--- something I would seriously consider.

Giving up that income would mean living poor, with poor schools, in a poor neighborhood, etc. And I am not so selfish as to expose my daughter to that.

Prakash writes:

Dr. Kling,

Since in the 1950s americans did most of the manufacturing, shouldn't the basis of comparison be whether a chinese worker (who does the manufacturing) will be able to afford these items in 1.6 months or 8 months?

$4580 / 410 (average monthly wage in shenzhen)
= 11 months

Even if you eliminate some high ticket items manufactured in the US, you won't see a significant reduction here. 8 or 9 months will still be the norm.

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