Tuesday, May 12th, 2015 2:52 pm

US Median Income

The 9% cumulative increase in real US median household income since 1980 substantially understates how much better off people in the median American household are now economically, compared with 35 years ago.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 8
But the same is true for the pre-1980 growth. So this number does NOT understate that growth of median income has declined after mid-1970s.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 5
Over the 1980-2014 period CPI probably does not fully account for quality improvements or for the value of new goods (e.g., the smartphone.)
-see background information here
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 5
Bio/Vote History
         
Autor David Autor MIT Agree 5
I think it's more likely than not given secular improvements in healthcare, longevity, technology, and air quality.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 2
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Uncertain 8
There are gains in health etc. not measured in earnings but also psychological costs of growing inequality and a sense of disappointment.
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Disagree 5
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Strongly Agree 9
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 5
Have to factor in changes in transfers, changes in household size, changes in labor force participation and CPI bias.
Bio/Vote History
         
Cutler David Cutler Harvard Agree 7
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 2
Likely true, but it not hard to construct arguments that contradict it. For many groups, health is getting worse.
Bio/Vote History
         
Duffie Darrell Duffie Stanford Disagree 3
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Uncertain 7
Other relevant factors would be: time spent commuting, increase in % of 25-53 employed, hours worked, hours connected to work email at home
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 5
"Understates" yes, "substantially" I revert to uncertain.
Bio/Vote History
         
Einav Liran Einav Stanford Agree 5
Bio/Vote History
         
Fair Ray Fair Yale Uncertain 5
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Did Not Answer
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 6
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 7
so much of our day is spent doing things that didn't exist back then that it's hard to believe the #s fully account for new products
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Uncertain 3
CPI bias is important even w that in mind, 9% seems a small gain over 35 years & i THINK median family is working many more hours
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 3
Lots of real growth in the top deciles and the bottom deciles. Not so clear at the median.
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
Iphones weren't available then suggesting understatement. But both partners often work, which is stressful. This suggests overstatement.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 5
Depends how "better off" defined. Technology (eg smartphones), medical services, lower crime, etc have increased quality of life broadly.
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Agree 10
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Disagree 9
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 7
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 8
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 7
No one I know would rather face the 1980 bundle of goods (at 1980 prices) than current bundle, at anywhere near the same incomes.
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 10
The rise in life expectancy alone is worth on the order of 1% per year.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 4
Difficult question, but life expectancy is up from 74 to 79 years - seems like a substantial gain not reflected in real median income.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
Due to measurement issues e.g. prices, family composition, measures of income, prob understates by >1% py. Add to that price quality bias.
-see background information here
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 9
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 8
Yes, because it misses many innovations, but at the same time the upper end of the income distribution is extraordinarily better off.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 3
Burkhauser et al. (2011) show faster growth in median post-tax, post-transfer size-adjusted household income including health ins. benefits.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 7
The official indices and deflators undervalue quality change and new goods. A small annual bias makes a big difference over 30+ years.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Did Not Answer
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 8
CPI has improved but is imperfect. Capital income matters, especially for retirees. Mean household size has shrunk from around 3.3 to 2.6.
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
Define substantial. Agree that CPI overstates inflation.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 7 Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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