Friday, February 13, 2009

Are you better off than your parents were?

My parents were born in the 50s, and would have been my age in the late 70s. So are we better off than our parents?

I really liked this photo collage on the Woman's Day website of changes over time in the last 6 decades on the state of the household. I wish it showed more consistent statistics, but some interesting things pop out.

Median household income is up 20 to 25% after adjusting for inflation and we consume more chicken, so I think we are doing well.

Another trend you might notice is the decline in household size. Individual income over the last 30 years or so has gone up 80%, which is higher than the median household numbers suggest.

Terry Fitzgerald (Minnesota Fed) shows this is because we are living in smaller houses, so household income is not growing as fast as personal income.

From his brief of this paper:
After adjusting the Census data for these three issues, inflation-adjusted median household income for most household types is seen to have increased by 44 percent to 62 percent from 1976 to 2006.

Three data issues adversely impact reported median household income gains: the choice of price index, a change in the mix of household types and the measure of income used.

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