11 December 2014

Is Inflation A Function Of Standard Of Living?

Tyler Cowen argues convincingly that despite inflation, the consumption utility of $100,000 of nominal dollars per year today is greater than it was 50 years ago (in 1964), but that the standard of living conveyed by $20,000 nominal dollars per year then was much greater than $20,000 nominal dollars per year now.

Thus, the upper middle class has seen deflation, while the middle class has seen inflation.

The main reason for the deflation at higher incomes is that there are many valuable goods and services available today that were not available at any price then.


Dave Barnes said...

Referring positively to Tyler is going to get you thrown out of the Democrat Party.

andrew said...

Honestly Tyler is hardly that bad. He doesn't hate gays, or think that unarmed black men deserve to be killed by cops. He doesn't think we are a Christian nation. He is reasonably "reality based", or at any rate at least is willing to consider real evidence. He is constantly interested in what is new and changing in the world and not in a negative way. And, he isn't anti-immigrant in any serious way.