NCPA - National Center for Policy Analysis


November 17, 2008

Are you better off than you were 40 years ago?  That is a complicated question to measure.  Wealth expands people's choices, and Americans are fabulously more prosperous than they were in 1968, says Veronique de Rugy, a senior research fellow at George Mason University. 

According to the Census Bureau, income per capita adjusted for inflation has doubled in the 4 decades since 1968, from $13,374 to $26,804.  Non-wage compensation, in the form of employee benefits, has also increased greatly during that time.  However, there's a better measure of living standards than raw materials: consumption. 

By this measure, the United States is doing very well.  In fact, according to a recent study by the Federal Reserve Bank of Dallas, luxury goods that few could afford in 1968 are now standard in most households, including poor ones:

  • In 2005, a full 85 percent of households that were classified as poor by the Census Bureau had air conditioning (compared to only 36 percent in 1971).
  • Some 97 percent had a color television (compared to 40 percent in 1971) and 40 percent had an automatic dishwasher (as opposed to 20 percent in 1971).
  • Almost 100 percent owned a refrigerator (compared to 25 percent in 1971).

Yet, the wealth accumulation of the last 40 years has also made the government bigger, says de Rugy.  Real federal spending increased from $774 billion in 1968 to $2.5 trillion in 2008 -- a 225 percent increase -- and federal spending per household grew from $11,800 to roughly $21,000 over that period, in constant dollars. 

This forms a libertarian paradox: economic freedom and wealth breed not just more political freedom, wealth and choice, but also more government, says de Rugy.

Source: Veronique de Rugy, "Are You Better off Than You Were 40 Years Ago?" Reason, December 2008.


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