Conventional wisdom states that 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 on misleading measurements of income and poverty.
The consumer price index used to compute official measures of real wages and poverty ignores two key sources of increased prosperity: the impact that the introduction of new and better products has on Americans' well-being and the consumer's ability to substitute less expensive goods for goods that have become more expensive. Rather than accepting the common notion that wages have barely kept up with price increases, the authors argue that the measurements used to calculate the cost of living have failed to keep up with economic reality. Adjusting income and poverty measures to fully account for the benefits of new and improved products--such as cellular phones, vehicle air bags, pharmaceuticals, and computers--and the consumer's ability to substitute goods reveals that Americans in every income group are substantially better off economically than they were a quarter-century ago.
At this event, Weinstein will be joined by AEI's Douglas J. Besharov, Gary Burtless of the Brookings Institution, and David Johnson of the U.S. Census Bureau. AEI’s Henry Olsen will moderate.