An issue that I've raised here several times in the last couple of years, namely how much better off the average American is now than in years past, is now being ferociously debated in the blogosphere thanks to Tyler Cowen's new monograph, whose title is misleading as to its actual argument, The Great Stagnation. Tyler is arguing that the rate of growth since the mid-70s has slowed. I think that is a defensible position, at least by some conventional aggregates, but the use of "stagnation" suggests that it's not about the second derivative but the first. I think Tyler is clear in his argument that it's the second, but, again, the title suggests otherwise.
In any case, the debate over whether or not and to what degree we are better off now than in the past rages on, with Bryan Caplan and David Henderson doing great work in demonstrating why things have never been better.
I think that the case is even stronger than perhaps they are making it. The discussion does seem to be heading in the right direction by making these comparisons in terms of the ultimate scarce resource: our time. Whatever one says about various aggregates, it seems to me that the key measure of how well off we are is how valuable our time is in terms of what it can purchase us. In David's last post, the point of comparison is weeks of median income needed to buy a car. This is not a bad way to go, but why not go to hours?
There's data on the average private sector wage that we can then use to determine the number of labor hours it would take to purchase various goods and services. This is the real measure of how well off we are: what can we buy with an hour of typical labor? To take a table that I borrowed from Mark Perry, here's one way to look at it:
There are numerous other items we could add to this list to make the same point. (See also this post from Don Boudreaux.)
The other way to make it is to take an item from years past and ask what we could afford to buy today with the same number of labor hours. So take the $400 TV from 1973. At the 2009 wage of $18.72, the 97.1 hours of labor it took to earn that $400 in 1973 would net you $1817.71. So with the same work that would have purchased what, by our standards, was a pretty crappy color TV in 1973, we could today buy a darn-near top of the line very large flat-screen with 3D. Or alternatively, we could go to Walmart and get a relatively cheap LCD TV that would still be a way better product than the 1973 TV and tack onto it a surround sound system, a blu-ray player, and then for giggles maybe a cheap laptop and a small iPod and maybe even a digital camera and still have change left for some DVDs and software. And all of this ignores the increased variety and higher quality of the artistic creations one can enjoy on all of those toys.
Looked at this way, it's just a no-brainer. When you tack on the fact that crime rates are down from the 1970s and the advances in medical care (even if their second derivative is negative, which is questionable) and the cleaner air and water, why exactly would anyone think it was better back then?
And presented this way, one could make a reasonable case that the second derivative isn't negative either. Despite what the aggregates show, it's possible that what our time can buy us is growing at a steady, if not increasing, rate.