Thought of the Day 12.04.09

If I tell you that average American income, adjusted for inflation, hasn’t increased since around 1990, what’s your reaction? If you’re like most people, this makes you feel bad about how stagnant your life has been and makes you feel as though things aren’t getting any better, a narrative loved by our media.

But what if I rephrase and say that household income has remained constant for two decades? That’s logically the same thing, but psychology follows language, not logic. Whereas failing to increase sounds bad, remaining constant sounds like stability, a good thing.

Even so, there’s another, deeper deception here. Instead of asking whether the average worker today is better off than the average worker back then, why not ask whether the average worker today is better off than he was back then? How does the income of a typical 50-year-old today compare with a typical 30-year-old of 20 years ago? At least this comparison would acknowledge the fact that almost everyone lives better as his own life progresses.

I know this perspective doesn’t help reinforce the media’s cherished pessimism narrative, but it does help us remember how much better most of our lives become as we age, gain skills, and acquire wealth.