The Economic Condition of Poor Americans (and the rest of us) Continues to Improve

Steven Horwitz

As many of you know, this is a set of data I've followed closely over the years (as has Don Boudreaux among others).  The Census Bureau just released the 2005 data on what households have (HT: Ariel Goldring) and it has allowed me to update my data.  In addition, I've also rendered the data more consistent.  Each column on the poor below reflects households below the poverty line.  In previous iterations I had said it was the "lowest quintile."  I've discovered that some of my data was that, but the older stuff was "below the poverty line."  I've now made it all poverty line as the cutoff.  Here's the historical data:

% Households with:	Poor 1984	Poor  1994	Poor 2003	Poor 2005	All 1971	All 2005
Washing machine	58.2	71.7	67.0	68.7	71.3	84.0
Clothes dryer	35.6	50.2	58.5	61.2	44.5	81.2
Dishwasher	13.6	19.6	33.9	36.7	18.8	64.0
Refrigerator	95.8	97.9	98.2	98.5	83.3	99.3
Freezer	29.2	28.6	25.4	25.1	32.2	36.6
Stove	95.2	97.7	97.1	97.0	87.0	98.8
Microwave	12.5	60.0	88.7	91.2	1.0	96.4
Color TV	70.3	92.5	96.8	97.4	43.3	98.9
VCR	3.4	59.7	75.4	83.6	0.0	92.2
Personal computer	2.9	7.4	36.0	42.4	0.0	67.1
Telephone	71.0	76.7	87.3	79.8	93.0	90.6
Air conditioner	42.5	49.6	77.7	78.8	31.8	85.7
Cellular Telephone			34.7	48.3	0.0	71.3
One or more cars	64.1	71.8	72.8 (2001)		79.5
source:  http://www.census.gov/population/www/socdemo/extended-05.html and prior years

I think these data largely speak for themselves.  The only categories where the poor have become "worse off" are in freezers (likely due to more being built into fridges) and now telephones, which is, of course, explained by the gains in cell phones. Stoves are down slightly, but that too could be due to swapping regular stoves for microwaves or even toaster ovens.  In any case, it's a pretty small decline.

The overall lesson is clear:  lives for Americans below the poverty line continue to get better in terms of what they are able to put in their households and have to make use of everyday. And do note that the average American household in 2005 was doing much better than its 1971 counterpart.  MUCH better - and this doesn't even count medical advances and the like.  So whatever one hears about stagnating wages and the like, the bottom line is ultimately what we can afford to buy and have in our households to improve our lives.  By those measures, life for the average American is better today than 35 years ago, life for poor Americans is much better than it was 35 years ago, and poor Americans today largely live better than the average American did 35 years ago.  Hard to square with a narrative of economic stagnation or decline.

What the current policy regime holds for the future remains, of course, to be seen.  But to use Pete's terms:  as long as the Schumpeterian horse of innovation and the Smithian horse of the gains from trade outrun the Government horse of stupidity, the winners will continue to be you, me and our children and grandchildren, even if the stupid horse is running a bit faster than it used to.

Comments

[Andy]

Interesting data. It would be interesting to look at the relative prices of things compared to income. Also, how does this data square with the data showing real income being flat over these years? How have consumers' balance sheets changed--more debt perhaps? Also, how many now are two income households? Technical progress? It would be a good idea to control for these factors.

[Steve Horwitz]

Andy:

I think the whole point is that the real cost of most goods (in terms of how many hours of work we need to engage in to afford them) has fallen dramatically, thus enabling all of us, and especially the poor, to have more. Even if wages have been flat, those wages buy more than they used to.

The data about real income being flat is misleading, if it's median household income. Just because the median is flat doesn't mean that people aren't getting richer. If new entrants into the distribution (e.g., young people and immigrants) come in below the median, it's possible for a majority of the people in year X to be richer in year Y and for the median to fall.

Yes, more households are two income, but that's a further sign of our wealth: more women are sufficiently productive and the demand is there for their labor to enable them to be employed. Not to mention that the falling cost of most goods means that it's cheaper to buy substitutes for household production than to devote labor to it.

Technical progress is surely part of why stuff costs less, but that's just another way of saying it's making us richer.

As for debt...the best data I can find quickly tells us that poor households are likely to have more debt and are more likely to file for bankruptcy, BUT their situation compared to other income groups hasn't changed much since the early 1990s. Here's a quick overview from the Congressional Research Service: http://www.bnatax.com/webwatch/bankruptcycrs3.pdf

So *increased* relative debt of the poor doesn't seem to explain them having more stuff. I'd argue the lower real costs of goods plus the slow increases in real income do.

[Mario Rizzo]

I try to make points similar to this in classes I teach. However, here I should say that recently I saw a Thanksgiving Day menu from the Plaza Hotel from 1899. My first reaction was: I if had the money I have now at that time, look at all of the nice things I could order. I'd be rich. But the reality is I'd be poor. If I had gotten a simple bacterial infection from some of the raw shell fish or even something worse, I'd probably die.

This reminds me of Mandeville saying in the *mid 18th century* that "the poor lived better than the rich before."

[cornish]

Actually, I think that more households are single income because there are more unmarried singles than there were several decades ago. But I don't know what the short term trends are. That's certainly been a bias in average household income measures for some time now.

Your figures are consistent with the stats showing that consumption based inequality trends are much flatter than for pretax income.

[Mario Rizzo]

Here is an excellent (and ungated) article from The Economist on the declining significance of inequality.

http://www.econ.upenn.edu/~dkrueger/press/economist.pdf

[Kell]

You do realise that your entire argument is a non-sequitur. Wages have been stagnating and a diminishing for the American middle class, which has all sorts of negative effects, and you don't disprove it. Instead, you simply show what amounts to a largely natural and unrelated development in technology and manifacture, which has dropped the prices and availability of these products. Wages don't keep up with productivity, people have to work more to stay afloat. This doesn't create a enjoyable life: it creates a life of insecurity and less personal time, which isn't enough compensated with shitloads of often useless stuff.

[Steve Horwitz]

Well Kell, you're actually wrong. Americans have more leisure time than ever (see Cox and Alm on this) and when you include non-wage compensation, total compensation continues to climb.

As for the middle class, you're right, it is getting smaller, mostly because people are moving up. Check out this Washington Post piece from two years ago: http://www.washingtonpost.com/wp-dyn/content/article/2007/12/21/AR2007122101556.html and you might check out this earlier blog post of mine: http://austrianeconomists.typepad.com/weblog/2009/08/more-evidence-that-were-all-getting-richer.html Here's the key finding from that last link: "Let me repeat that: over 30% of US households in 2006 earned above $75K compared to under 20% in 1980. Over the same period, the percentage of US households earning under $35K fell from 42.8% to 36.7%. Fewer households are poor, fewer are middle class, and a hunk more are above $75K."

Finally, there is nothing "natural" about development in technology. It happens because we still have free enough markets to turn new ideas into innovations and continue to reduce costs in the process. It's that very process of cheaper production costs that enables more of us to have higher household incomes and consume more in the process. Plenty of places in the world don't reap those benefits, so it's hardly natural. And oh yeah, they're pretty poor.

I think there's a lot of poor folks who are happy to have what you call "useless stuff" that our parents or grandparents didn't or couldn't afford, like the cell phone that can save your life in a car crash. Referring to life's basics as "useless stuff" is the arrogance of the comfortable. I doubt the poor see it that way.

[Mario Rizzo]

The argument here is simplified to the degree that we are not asking what determines the distribution of income (whatever it may be). Gary Becker argues, for example, that human capital makes more of a difference than it used to. So "educated" people are more productive in relative terms over "uneducated" than they used to be.

In any event, a discussion of how much better off we all are now than we used to be is incomplete. What are the factors involved in making people better (or worse off)? Maybe some groups SHOULD be worse off but the welfare state prevents that.

But most statist liberals don't care about anything more than criticizing the market because someone or other doesn't have more of what they think people should have. I find their pop income distribution "ethics" arbitrary and ignorant.

[Will Luther]

Prof. Rizzo makes a good point. These numbers also support the alternative hypothesis that "If it were not for the welfare state, the poor would be doing much worse." And the policy conclusion for today that follows is more redistribution (to offset the gains from current and future economic growth to the rich).

How would you refute this competing hypothesis?

[Roger Koppl]

What's to refute? Like Hayek, I favor a certain amount of redistribution. Hayek noted that the market is a "mixed game of skill and chance." I think meritocratic interpretations of the income distribution are probably inappropriate. Even to the extent that the poor are poor because of character flaws, I would still like the the state to ensure they do not drop below the level "consistent with common humanity," as Adam Smith put it. And, of course, that level has risen a lot since Smith's time and even, as Steve points out, in the last 35 years.

[Peter G. Klein]

Thanks, Steve, for sharing these data. By coincidence, I happened to be reading today about Robert Frank's concept of "positional externalities," which illustrates with great clarity why I find much of behavioral economics absurd (sorry, Roger!). Frank would argue, of course, that Steve's data are incomplete, because they do not take into account the envy that the poor may feel towards other people whose standard of living may have improved even more rapidly than their own. If the (negative) positional externality is big enough, then the poor may actually be worse off due to the increases in productivity and wealth and technological improvements documented by Steve.

[Will Luther]

Prof Koppl:
Presumably Steve's hypothesis is that economic growth is good for everyone--including the poorest in society--even without redistribution. My apologies if I have misconstrued his position. But if I haven't, the alternative hypothesis should be addressed.

[Jerry O'Driscoll]

(1) Envy is a vice, which should be discouraged not rewarded.

(2) Most reditribution is from a subset of the middle class to another subset of the middle class. If the poor were actually helped by welfare, we would have an interesting debate. (Credit Gordon Tullock and Aaron Director.)

[Barbarossa]

I'm curious: What was Hayek's position on redistribution? To what extent and of what nature? And being "consistent with common humanity" sounds nice but is vague. How specifically would one achieve that aim and by whose standard, and that without arbitrariness?

Oh, and wouldn't the prevalence of two-income families in fact indicate a greater number of work hours involved in purchasing the same products?

[Steve Horwitz]

Will,

That is indeed my hypothesis. I also think redistribution attempts generally harm the poor over time. You can read my argument and the data as being just as I argued at the end: the progressive forces of the market are outweighing the stupidity forces of the state.

[Roger Koppl]

Barbarossa: Incorrigible statists like me are terribly vague, it's true. We muddle through without clear standards, babbling on about "sympathy" and similar airy concepts.

[dsylexic]

Low income Indian rural folks also have superior gadgets and appliances compared to a King from the 15th century. This doesnt make the fact that the peasant is still a peasant go away.It is all relative wrt to your contemporaries. Comparing the past level of comfort doesnt reveal much other than the fact that human beings keep innovating.

By no means should this be construed as a vindication of the fiat money regime of the last 40 years.Correlation is not causation.
Just imagine the tremendous gains eveyone would have IF there stable money to go along with this?

OR should we argue that without all that loose money many of these efficiences wouldnt have come into place -who is to say?. its a hypothesis

[Roger Koppl]

@ dsylexic
"It is all relative wrt to your contemporaries." I wonder if you meant that quite as strongly as it sounds. I think non-positional measures such as longevity, infant mortality, and probability of violent injury also matter. If you agree, then the comparison with 15th century kings may matter in some sense.

BTW: don't think Bob Frank says "absurd" things with his positional goods stuff. It's based on solid evolutionary reasoning. But I think his policies would not improve overall well being, in part because they would tend to divert entrepreneurship from markets to politics.

[Pietro M.]

I wouldn't be so optimistic. Americans have more cell phones and more debts. The problem is similar across the percentiles of income, so that at first order it doesn't seem that income inequality affects more the poor or more the rich. Both consume more than they can manage to buy in an equilibrium conditions, but the wealthy may not bother for the lack of the third cadillac.

Globalization is good, deregulation is good, internet is good. But all these goods things have been exploited not to accumulate capital but to consume by equity extraction (a.k.a. capital consumption). The long term result is economic decline.

Empirically I can't judge between the optimistic and the pessimistic view. I only know that there are more debt and consumption than used to be, and some part of the latter is sustainable (progress, globalization, deregulation) and some is not.

Besides, as reported in the conclusions, there is a problem with present policies, in that the efficiency of allocation and coordination will be hampered more and more, the reason being that an economy based on asymmetric intervention made to relieve invetors from the cost of the left tail will never be able to coordinate responsibly, thus giving rise to a race to the bottom which can be summarized in "Middle-of-the-road polciies lead to socialism".

The market economy and discretionary anticyclical policies can't coexist, and the greatest achievement of the market economy is to have survived twenty plus years of such kind of irresponsible policies. :-)

Apocalypse mode off.

[amv]

Pietro,

I see no evidence for the US to have eaten up their capital. Perhaps they just didn't bothered to own the capital accumulated on US soil: To the extent Americans consume more than they produce (termed 'living beyond one's means'), we Germans among others take advantage in producing what you want and get US assets for that. Our savings finance the capital accumulation in the economy that promises the best return at lowest risk (despite of crisis). The US manages to lead in wealth AND growth, something many economists believed to be exceptional at best. So don't worry that much about capital consumption in the US. We guys back you up out of our own interest. Read Don B. at Cafe Hayek.

[Laeeth Isharc]

The poor are much more affected by changes in the real cost of raw commodities than are the rest of us. (They are also very much affected by changes in the cost and availability of credit, but this aspect is too complex to address here).

Commodities seem to experience multi-decadal periods of bull and bear markets (possibly within a secular fall over periods of millennia), and the period studied happens to coincide with a pronounced bear market in commodities. For example real corn prices were 6.5x higher in 1971 than they are today.

Given that all but the top end tend to spend about 20% on food and that this is only one of several cyclical factors boosting post tax disposable income over the period, I wonder if one should be cautious about inferring much about the longer term from this episode. Is there a risk of implicitly extrapolating in this way without considering some factors that may mean revert?... See More

[bob]

It seems like home prices really have screwed the middle class, both before and after the housing bubble burst. From the 2007 wapo article linked above:

"Mortgages, which represent 79 percent of all debt, are the more pressing concern. But even according to the most pessimistic estimates, only 1 to 2 percent of homeowners will be forced into foreclosure in the next few years. Assets have grown faster than debts for most middle-class families. Median net worth has grown 35 percent since 1989, according to the Federal Reserve Board, and only 15 percent of households have debt payments worth more than 40 percent of their income or are 60 days late on any debt payment."

[liberty]

Peter Klein said: "I happened to be reading today about Robert Frank's concept of "positional externalities," ... Frank would argue, of course, that Steve's data are incomplete, because they do not take into account the envy that the poor may feel towards other people"

I have never understood this. Should we also take into account the rich's desire to squash poor people? If the poor become too wealthy the rich will lose this great utility they get out of watching the poor suffer!!

No, it makes no sense. Neither envy, nor gloating should be taken account of.

[deputyheadmistress]

I hesitate to ask this simple question in such company, but am I reading something wrong? It seems to me that the poor are also worse off in regard to washing machines, which means they need to spend more at the laundromat as well.

[Pietro M.]

I wrote:

"it doesn't seem that income inequality affects more the poor or more the rich"

That's the most meaningless sentence I read (well, I wrote) this year. I meant "... that the debt and consumption boom affects..."

AMV: To see no evidence, in economics, is the rule: if there were it would be a natural science. Have you noticed that discussions in economic theories last for centuries and are normally solved by amnesy? :-)

Jokes apart, I had the very same discussion two or three years ago with a friedn of mine. I was the pessimist, he was the optimist (something never change, I need a dopamine boost).

The result was stated without proof in my previous comment: theoretically and empirically it is not clear whether or not american citizens have consumed through accumulating unsustainable or sustainable debt positions, because sustainability is never an economic observable. You don't know (nobody can) if the economy is beyond or on (or below) the production frontier (like in Garrison's theory) because you can't observe the production frontier.

Theoretically, it is possible to develop a trade deficit because there is a glut of domestic investment opportunities (good thing), or because there is a dearth of savings (investments are equal to savings minus public deficit plus net imports), which may be justified or not, but often is bad.

A reduction in saving can be the effect of an improvement in wealth (no need to save more for more future consumption) or something else. Ex post, however, the financial crisis may have given us some hints that american citizens have equity extracted capital from the financial and real estate bubbles, which means that there was a component of capital consumption (and a huge one) in the US consumption binge.

However, this is not to deny that there is also a sustainable component in the previous consumption boom: deregulation, globalization and telecommunications are real positive shocks (well, I shouldn't call a shock something that is permanent) and not the result of monetary illusions.

However, there is no empirical or theoretical way to assess the quantitative importance of capital and sustainable consumption in a boom. We only know that after a while we have had a gigantic financial crisis. I wasn't surprised at all, but I don't consider it conclusive evidence.

Against my position you can find Shenoy's, Bodreaux's, Murphy's and many other posts here and there. I have no final proof I am right, but I never read a conclusive proof I am wrong. The fact that in certain theoretical cases (and also historical cases, of course) good trade deficits can arise is beyond doubt, and the protectionist babbling against trade deficit per se is a scam. That doesn't mean that all trade deficits are good: like any other financial data, it is affected by monetary policy, it can be distorted by it, and it can go out of equilibrium in the presence of the very same insane policies we have seen in the last two decades.

The greatest error that a free market economist can do is to think that the events of the last two decades were the triumph of free markets. Mockery by part of the Stiglitzes and the Krugmans is deserved in this case, although there proposed therapy of giving more poison to the patient is to be rejected (like De Grauwe's). Greenspan has distorted the US economy so much that we simply can't know what was normal and what was crazy. Would have we had such a boom of securitized loans without the Fed? Would have we had a 7% trade deficit? Would have we had 200% household debt in some EU countries? Maybe. I consider it unlikely, but historical judgements are subject to extreme uncertainty.

PS There was a Fed paper about the US trade debt which stated that the reason why the US didn't pay on the debt (negative net transfers) was that they received on their credits more interests than they paid on their debts, because debts were bonds and credits were stocks (direct foreign investment, I think). The two income flows offset each other for a decade, but while the debt service still seems to be bound to grow to plus infinity, the credit income is bound to become negligible (also because of a positive feedback: foreign credit makes us debt cheap, and us consumption makes foreign investment profitable). And yes: several countries benefited from it. When the US is a regional power the chinese government will be very thankful.

PPS Dynamic general equilibrium models have a transversality condition which assures that at the end of time there won't be useless capital, which would be a waste. We might say that the US economy has had a beyond-transversality dynamics. The present crisis could have been postponed provided that an infinite amount of debt would have arisen, like in Hayek's evergrowing inflation required to keep the boom from busting.

[deputyheadmistress]

Never mind. I was reading something wrong. Blush.

[Jerry O'Driscoll]

Certainly the housing boom and bust led to a huge amount of capital consumption. That is revealed in the price collapse for homes. And in the increase in the household savings rate.

I don't think the evidence on two-income households and consumer debt cut all one way. Steve's data suggest that households are succeeding overall in advancing their living standards. But for a long time that was accomplished by single-earner households and with debt (perhaps a mortgage).

[Pietro M.]

This year I've read an interesting although somewhat superficial (the author, i.e. myself, isn't an economist) paper on similar issues: it tried to explain how systematic countercyclical policies could lead the process of financial innovation astray by boosting irresponsible lending, maturity mismatch, financial leverage, household debt... the two main results were that assessing the goodness of financial events becomes impossible because it would need the circumvention of the knowledge problem in the absence of meaningful prices, and that the only alternative to a market killed by moral hazard is a market killed by regulations set to avoid the problems caused by moral hazard, which is tantamount to saying "from the fire (irresponsible entrepreneurship) to the frying pan (full fledged socialism)".

http://brunoleonimedia.servingfreedom.net/Mises2009/Pietro_Monsurro--Mises2009.pdf

[amv]

Pietro & Jerry.

Remember, you argue out of the ABCT framework which is designed for a closed or global economy. How do you correct for that when applying this framework to just a large fraction of the economy, the US? Further, it is of course easily possible to check empirically for actual capital consumption. Just look at per capita real GDP 1990-2006 or over whatever period (you think the bust is due to the boom, right?). If it is not falling over time, capital is not consumed. Believe me, you would have realized capital consumption. Your government (and troops abroad) may consume your capital. But think of Peter's other two horses: Smith's gains-from-trade and Schumpeter's innovation still outperform government stupidity. Steven's findings make obvious, I think, that the US has more capital today, embodying better knowledge, not all of which has to be burned just because of a housing sector boom.

[Payday loans]

Skewed data from other sources or not, this blog perfectly sets the record straight. Well done Mr H once again.

[Jerry O'Driscoll]

amv,

Larry Lindsey has estimated that households have lost $13 trillion of wealth since the recession began in Dec. 2007.

[muirgeo]

Over at Cafe Hayek Mr. Horwitz tells me he needs updated data. Well here it is;

Here's some more recent data Mr. Horwitz,

http://www.creditslips.org/creditslips/images/2008/03/03/filings_per_dayjan_2006_to_feb_20_2.jpg

And this;

http://www.google.com/hostednews/afp/article/ALeqM5jkA6C3MyCVwKtYPQ0gAe9A4D8lAg

The annual Household Food Security report showed that in 2008, families in 17 million households -- 14.6 percent of US homes -- had difficulty putting enough food on the table at some point during the year, an 11 percent increase over 2007.
The figures "represent the highest level observed since nationally representative food security surveys were initiated in 1995," the USDA said.

http://bigpicture.typepad.com/comments/images/2008/07/25/foreclosure_data_q2_08.png

[Steve Horwitz]

Shocking that people are having problems putting food on the table during a recession. Absolutely shocking. Find me the comparable data, then we'll talk. As I said, I'm willing to bet the trends I've noted will continue, even through the recession. Put your money where your mouth is Muirgeo.

[amv]

Jerry,

sure, I do not deny that. Pietro makes the claim that Americans consumed their capital before the crisis (or am I wrong about this?). Further, I share the Sumner view of why the losses taken are much higher then necessary.

[Pietro M.]

AMV: AE has been developed in a closed economy, that doesn't mean it can't be applied to an open one. The only novelty is that the effect of exchange rates should be considered. So far, there are only a couple of works on open economies, the best known probably being "monetary nationalism and international stability" by Hayek, and no more than two or three more recent papers, as far as I know.

A closed economy which doesn't save can only increase consumption by undermaintanance of real capital, i.e. employment of submarginal resources. An open economy can accumulate debt, overvaluing the present net wealth and consuming it, and this adds to the durability of an unsustainable boom.

You look for evidence in the data and say that capital undermaintainance and unsustainable debt positions should be visible as a fall in output. That's equivalent to assuming that potential output and the output gap are observables, but they are not.

Your assumption requires either of the two following assumptions: that the price system reveals the real underlying economic data, so that you can compute values by economic calculation, or that it is possible to understand the real state of the economy without a price system.

The latter hypothesis is refuted by the critique of socialism; the former by ABCT, in that monetary policy influences the significance of prices (relative prices), which are necessary for entrepreneurs to establish the actual state of the economy.

However, a time must come when capital consumption becomes evident in terms of falling output (deindustrialization?), which is something that may have occurred to the US industry. Unfortunately, this redde rationem can be postponed for years by accumulating debt, that is, by sustaining the structure of the real economy by an unsustainable dynamic of financial aggregates, insofar a saver (a saviour? :D) can be found.

Just to make it clearer: output is not f(K,L), but a complex result of a time consuming process. If durable capital is undermaintained (austrian preferred term is consumed) or if savings are bought with imaginary future wealth from somewhere else, output can grow. It can grow for years even without debt and innovation, it can grow longer if there is real (sustainable) innovation in the meanwhile and it can last even longer if there is a debt boom (there are also sustainable debt booms, however).

That is why maybe the last stage of a long series of booms kept from busting by monetary policy (1921 1923 1927...) has a last stage of pure financial folly, whereas the previous acts may have a real (also sustainable) component (radio, automotive, aircrafts). The same can be said for 1987, 1990, 1998, 2000, 2007: the only difference is that the Fed in 1929 precipitated the crisis by cutting lending, and in 2007 it tried to do what it did in 1927 or in 2000.

We are talking about history and not theory: my interpretation of history is poor (never studied the details) and sketchy. The important theoretical points are: don't use prices to judge sustainability when prices are distorted by interventionist monetary policy; don't expect output to fall at the same time as capital is being consumed (like Krugman says); don't forget that unsustainable and sustainable booms can occur at the same time, and thus capital consumption may well be in relative and not in absolute terms (however, I'm of the absolute camp, once adjusted for debt and price distortions, but I can't be sure about it).

[RJ]

How does your analysis (in this and the follow-up) change if healthcare and housing costs are included?

[Steven Horwitz]

Good question RJ.

Housing is one of the few items (even before the bubble) that has risen in terms of its labor-time cost. However, the quality of the product has risen immensely over the same period. So although median home prices have risen significantly, the median home is much larger and much better equipped than in years past. Whether that nets out to "better off" is a matter of judgment. I suspect it's a gain in that safer, more comfortable, larger, better equipped housing is more than worth the cost.

I think healthcare probably is amenable to the same analysis. Costs are up, but the good/service is of much better quality. We spend more on it, but we get a lot more. The rise in life expectancies are one indicator that this is a trade-off that's worth it.

Of course in both of these cases one has to take into account gov't policies that have made prices higher than they need to be. Such policies are in place for the listed goods as well, but I think these two industries have been very specific targets of cost-enhancing policies.

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