Wednesday, March 30, 2005

Comparisons that rely on household income are mostly crap. The
'household' is not a meaningful unit of measurement. The size of the
average household has declined since the 1960s from around 3 to around 2
persons per. Factor that in, and the 25% rise in household income becomes
about an 89% rise in per capita income.

Persons per household have declined because people are wealthier, so that
more people can afford their own place.

With more economic opportunity, people are waiting longer to get married
and have kids. With people staying single longer, and married couples
waiting longer to start families, average persons per household declines.

Divorce plays an important part in this too. Increased wealth lowers the
economic consequences of divorce (as Gary Becker explains), increasing
divorce rates. Divorce means a households splits up into two households
with fewer persons per. The near 50% divorce rate since the 1960s makes
this statistically significant.

This can happen only because people today are substantially wealthier than
a generation or two ago.