What’s Cheap? What’s Expensive?
Starting with, “…eating and clothing ourselves is getting easier all the time,” an Atlantic article discusses “cheap” and “expensive.”
- toasters, washing machines, other manufactured goods
- internet movies
- cell phones
- home energy: electricity, natural gas, oil
- homes and apartments
- health care
- medical insurance
- higher education
Briefly stated, “productivity divergence.” To be discussed tomorrow.
The Economic Lesson
We can define “cheap” and “expensive” by looking at household spending. Cheaper items require an increasingly smaller proportion of our income. Food and clothing are the perfect example. 90 years ago, households used more than one-third of their spending for food and clothing. Now, according to the BLS, the total is closer to 15% for a family earning $62,000 before taxes.
An Economic Question: How does income relate to what we define as cheap and expensive?