On Mar 12, 1:30 pm, ta <padl...@[EMAIL PROTECTED]
> wrote:
> If someone asks you if you are better off financially today than 10
> years ago, what is the most objective way to measure that?
>
> "Real wages" is the usual term that I have seen most, but I'm just
> wondering if that is universally accepted, or is there a different/
> better measure. "Real wages" make good sense to me, but not being an
> expert in economics, I'm just trying to learn if that is the best way.
Wages is obviously only one measure. Even in regard to just wages, it
depends what its buying power is, i.e. what you can get for it. Before
the recent bout of commodity inflation, it was significantly more than
10 years ago. Just consider electronics where prices mostly declined
by a huge degree. So, just by way of one example, you could buy 3 or 4
comparable computers for the same price - or one computer with a 100x
the power. Then there are all the things you couldn't have bought at
all 10 years ago, eg. DVD players, Tivo, iPods, etc.
However the other significant measure of wealth is net worth, which is
the value of assets minus debt. Both stocks and real estate were up
substantially in the last 10 years (even putting aside the recent
declines). True, people who bought homes or stock in the last year or
two, not so good. But anyone who bought before that and have held on
did very well.
Household net worth about doubled in the 10 years 1996-2006. It
obviously dropped some last year and likely will again this year. Once
this decline is behind us it should resume its climb.
Fred Weiss
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