Prices, Poverty, and Inequality: Why Americans are Better Off Than You Think
According to conventional wisdom, the economic well-being of all but the wealthiest Americans has stagnated or declined over the past twenty-five years. In Prices, Poverty, and Inequality: Why Americans Are Better Off Than You Think, Christian Broda and David E. Weinstein argue that this idea is based upon misleading measurements of wealth and poverty. The consumer price index used to compute official measures of real wages and poverty ignores two key sources of increased prosperity: the introduction of new and better products and consumers' ability to substitute between goods. Deflating nominal wages by a cost-of-living index that adjusts for these previously unconsidered factors of prosperity suggests that the real wages of the poor have actually risen by 30 percent since the late 1970s and that the poverty rate in America has fallen dramatically over the last 40 years. How can we account for the discrepancy between standard measures of economic well-being which suggest a trend of increased poverty and alternative measures that indicate an upswing in prosperity? As Broda and Weinstein argue, product innovation has long been a key source of prosperity for American households. New and better household appliances, cellular phones, vehicle air bags, medicines, and computers are among the many product improvements that have benefited Americans, including the poor, over the last few decades. Yet current official price statistics capture only a portion of the benefits that these improved goods provide to American households. Broda and Weinstein conclude that adjusting poverty measures to fully account for the benefits of product improvements reveals that Americans in every income group are substantially better off economically than they were a quarter century ago."
What people are saying - Write a review
We haven't found any reviews in the usual places.
Explaining CPI Biases
CPI Biases and Poverty Measures
1 other sections not shown
10th percentile ACNielsen Homescan adjusted American American Enterprise Institute average Boskin Commission Broda and Weinstein C-CPI-U captured Chairman and CEO China Chinese imports Christian Broda code Product group coffee Consumer Price Indexes consumption baskets cost-of-living index CPI Biases CPI-U Economic example expenditure per adult export extensive margin Glenn Hubbard group Slope error group Standard Rank household expenditure household group household h impact income groups inequality low-income households Meal starters module nomic number of varieties paid by wealthy Pepperdine University percentage point period poor households poverty line poverty rates poverty thresholds price changes prices paid Product group Slope Professor purchased by household quality bias Quality Engel Curves Rank code Product real income real wages regression Resident Fellow rich households sample sectors Senior Fellow Source Standard Rank code sumers Table true COLI U.S. Census Bureau U.S. consumers U.S. import United Universal Product Code UPCs Visiting Scholar Weinstein 2008