From: Hal Finney (hal@finney.org)
Date: Thu Apr 10 2003 - 10:55:22 MDT
Samantha writes:
> Are you going to attempt to say that the cost of living in say
> 1970 dollars has not risen and risen dramatically in the last 32
> years?
The issue is not the cost of living by itself, but the cost of living
compared to income. Both have increased due to inflation.
The way to get an objective measure is to use constant dollars.
These are dollars adjusted by the consumer price index, which reflects
price changes in a typical package of consumer expenditures. The CPI
takes into consideration increases in costs of food and housing, as well
as clothing and the other things that people spend money on.
So what your question boils down to is, has per-capita personal income,
measured in constant dollars, increased since 1970? Luckily, the answer
is easy to find. Looking at the Statistical Abstract of the United
States, at http://www.census.gov/prod/2002pubs/01statab/income.pdf,
table 647 shows per capita income in both current (i.e. the currency of
the time) and constant dollars.
In then-current dollars, per capita income rose from $4,101 to $30,069
from 1970 to 2000. Applying the inflation factor vs constant 1996 dollars
(not shown in the table but it can be calculated from other columns as
3.44 for 1970 and 0.94 for 2000) gives a constant-dollar per capita
income increase from $14,114 in 1970 to $28,121 in 2000. Per capita
income has roughly doubled during the time period when inflation is
taken into consideration.
In other words, the cost of living for a typical family is about half
as much today, relative to their income, as it was in 1970, just the
opposite of what you claimed.
Hal
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