Inexpensive, Low-Quality Goods and Inequality

A paper by Christian Broda and John Romalis implies that inequality may not have changed as much as we thought in recent decades, and the result is getting lots of publicity. But Lane Kenworthy doesn't think the claim about inequality is very compelling:

Inequality and Prices, by Lane Kenworthy: Steven Levitt and Will Wilkinson point to a new paper that Levitt says “shatters the conventional wisdom on growing inequality” in the United States. The paper is by Christian Broda and John Romalis, economists at the University of Chicago.

Here’s their argument: Income inequality has increased over time. But analysis of consumption data indicates that people with low incomes are more likely than those with high incomes to buy inexpensive, low-quality goods. In part because those goods increasingly are produced in China, their prices rose less between 1994 and 2005 than did the prices of goods the rich tend to consume. Hence the standard measure of inequality, which is based on income rather than consumption, greatly overstates the degree to which inequality increased. The incomes of the rich rose more than those of the poor, but because the cost of living increased more for the rich than for the poor, things more or less evened out.

Their point that the prices of some goods have risen less than the overall inflation rate, and that this is due in large part to imports from China, seems perfectly valid and worth making. It has important implications for our understanding of how absolute living standards for America’s poor have changed over time.

But I’m not sure why Broda and Romalis, or Levitt and Wilkinson, think this should alter our assessment of the trend in inequality. Do they mean to suggest that the revealed preference of the poor for cheap goods is exogenous to their income? In other words, people with low incomes simply like buying inexpensive lower-quality goods, and they would continue to do so even if they had the same income as the rich. Likewise, the rich simply have a taste for better-quality but pricier goods, and they would continue to purchase them even if they suddenly became income-poor. If this is the assumption, I guess the conclusion follows. But I can’t imagine the authors, or anyone else, really believe that.

Actually, Levitt may believe it. “How rich you are,” he says, “depends on two things: how much money you have, and how much the stuff you want to buy costs” (my emphasis).

Consumption is worth paying attention to. But income is important in its own right because it confers capabilities to make choices. What matters, in this view, is what you are able to buy rather than what you want to buy. If a rich person with expensive tastes gets an extra $100,000, she can continue buying high-end clothes and gadgets. Or she can choose to purchase low-end Chinese-made products and save the difference. Suggesting that if she opts for the former there has been no rise in inequality is not very compelling.

And on the consumption data, recall Gordon and Dew-Becker's statement:

The paper concludes that data on consumption inequality are too fragile to reach firm conclusions...

[Felix Salmon also responds in "Rich-Poor Inflation Differentials: Smaller Than You Might Think" (there's a rebuttal comment from James Surowiecki), and my indirect response is here. My point was that an assessment of how imports of low-priced manufactured goods impacts the welfare of the working class has to include all of the changes that have hit labor and product markets as a consequence of increased international trade, and when you do that, it is far less clear that workers have benefited overall even if you take the Broda and Romalis result as given.]

Comments

[anne]

"The paper is by Christian Broda and John Romalis, economists at the University of Chicago.

"Here’s their argument: Income inequality has increased over time. But analysis of consumption data indicates that people with low incomes are more likely than those with high incomes to buy inexpensive, low-quality goods. In part because those goods increasingly are produced in China, their prices rose less between 1994 and 2005 than did the prices of goods the rich tend to consume. Hence the standard measure of inequality, which is based on income rather than consumption, greatly overstates the degree to which inequality increased."

Notice that the University of Chicago is still the University of Chicago, still ready to tell us that war in Iraq will be freer than free and all that jazz.

Since I am content to live in less than Windsor Palace, I am obviously rich as the Queen and from what my mirror tells my far prettier. Were I content to sleep on the Metro, I would still be as pretty, though possibly messier and rich as the Queen were she content to sleep with me.

[Spectator]

Ignore the political message in the Broda-Romalis paper. The real message is the the rich have not really gotten richer. They're the beneficiaries of huge money and credit creation that is not real wealth. Easy money and inflationist policies do not create real wealth.

However, the inflation does impoverish those without direct access to the Fed's money hose. Even if cheap Chinese goods kept that impoverishment hidden for a short while.

[anne]

"Were I content to sleep on the Metro, I would still be as pretty, though possibly messier and rich as the Queen were she content to sleep with me."

This, by the way, is not a hint of longing; not that there's anything wrong with that.

What is it though about conservative thought that makes it always seem like un-thought, and makes it seem even less moral than un-thought?

[anne]

"The real message is the the rich have not really gotten richer. They're the beneficiaries of huge money and credit creation that is not real wealth. Easy money and inflationist policies do not create real wealth."

Good grief; not only is it ain't necessarily so, but it just ain't so. Money, big money, buys like big stuff; even after adjusting for value judgments.

[evagrius]

Well, everybody knows that the poor just LOVE eating red beans and rice everday.

[Spectator]

"Money, big money, buys like big stuff; even after adjusting for value judgments."

Ah, that's the common illusion. For the most part all you've created is more money chasing the same big stuff.

[robertdfeinman]

This line of argument was thoroughly debunked in the lecture given by Elizabeth Warren that is on YouTube.

It was even discussed here. For those who didn't see it the first time:

http://www.youtube.com/watch?v=akVL7QY0S8A

Her point (supported by ample data) is that the stuff that is getting cheaper (food and clothing) is a) discretionary and b) comprises a small part of household spending. On the other hand the things that have gotten more expensive (and faster than inflation) are necessities and are now a significant part of spending: health, education, transportation costs (not car ownership) and domicile.

Watch the video, it's about an hour, and then ask yourself how these right-wing pundits keep their jobs. Oh, never mind. They keep their jobs because their salaries are paid by the super wealthy whose cause they serve.

[kthomas]

Thanks, rdf.

Prof. Thoma put this one up a few mothns ago. Sobering.

[kthomas]

As for this article > nearly complete and total rubbish (propaganda)

[Spectator]

Can we hope liberal economists are connecting the dots? Cheap stuff from China helps the Fed tout low inflation. They can turn around and provide easy money to Wall Street. The wealthy take their cut of the Fed handout, and generously help put much of the public deeper into debt.

Meanwhile, with all this new money and credit, cost of living is rising faster than any inflation measure. The rich have gained enough to keep up, while everyone else is a lot poorer. Wall Street runs into trouble, and liberal economists say lets bail them out lest this scheme is disrupted. Only Volcker had the guts to criticize the Fed, and even he seemed to hold back.

[John V]

rdf,

I find the premise of that argument odd for several reasons:

1. the shrinking proportional relationship between what people spend on food/clothing and one's income is a key and central positive development to capitalism and relatively freer exchange over the past century. Not too long ago, in historical terms, it was nearly 100% and has been falling rapidly. Indeed even today, a key characteristic of difference between wealthier and poorer societies is this very relationship.

2. The things cited that have been growing faster are also (and have been for quite some time) at or near the very center of activist public policy. IOW, the problem areas are the ones that have become the most distorted in market exchange terms, have been most in the cross hairs of interest groups and have had the most governmental attention in terms of laws, subsidies, misguided policy changes and special interest-induced restrictions, market-affecting regulations, favors and heckling. Coincidence? No. Not in any way, shape or form.

[anne]

http://www.guntheranderson.com/v/data/itaintne.htm

1935

It Ain't Necessarily So
By George and Ira Gershwin

It ain't necessarily so
It ain't necessarily so
De things dat yo' liable to read in de Bible
It ain't necessarily so

Li'l David was small but oh my
Li'l David was small but oh my
He fought big Goliath who lay down and dieth
Li'l David was small but oh my

Oh Jonah he lived in de whale
Oh Jonah he lived in de whale
For he made his home in dat fish's abdomen
Oh Jonah he lived in de whale

Li'l Moses was found in a stream
Li'l Moses was found in a stream
He floated on water 'til ole Pharaoh's daughter
She fished him she says from that stream

It ain't necessarily so
It ain't necessarily so
Dey tell all you chillun de debble's a villain
But 'taint necessarily so

To get into Hebben don' snap for a sebben
Live clean, don' have no fault
Oh I takes dat gospel whenever it's pos'ble
But wid a grain of salt

Methus'lah lived nine hundred years
Methus'lah lived nine hundred years
But who calls dat livin' when no gal'll give in
To no man what's nine hundred years

I'm preachin' dis sermon to show
It ain't nessa, ain't nessa
Ain't nessa, ain't nessa
It ain't necessarily so

[John V]

Spectator,

I think you're connecting the wrong dots. Cheap goods from China and Fed-induced monetary inflation and credit/investment fiascoes are unrelated in terms of cause and effect.

Cheap goods from China is a mainly positive market phenomenon done through people freely exchanging goods and services in the market place.

The monetary/financial fiascoes and inflation is a Federal Reserve phenomenon that is totally negative.

[robertdfeinman]

John V:
Did you watch the video? All of it? Any of it?

Elizabeth Warren didn't just repackage a bunch of data from some libertarian think tank, she had special analysis runs made for her by the appropriate government agency.

Isn't it too bad how facts keeping getting in the way of ideology?

[muirgeo]

It’s sad what some will do to attempt to justify plutocracy. The saliant fact that the per cent of corporate profits in the finance industry rose from 10% to 40% from the early 70’s to the present is fact enough for me to understand just how massive the transfer of wealth has been from the working class to the wizards of paper pushing on Wall Street. Oh yeah, those derivatives sure add lots to the productivity pie….NOT!

If someone is trying to claim the current economy is a shining example of the success of free and competitive markets in a democratic society they have a lot of explaining to do in terms of their definitions of competitive, free, markets, democracy and oh yeah honesty.

This is a rigged market just as it was in 1776 and change is in the air such that an economic royalist and his courts proud papers proclaiming otherwise will be, hopefully, overrun by the truth that people know as they live out their daily lives more and more on the edge.

[Spectator]

John V - I never said cheap goods from China are not a good thing, I'm all for the benefits they bring. However, this has helped the Fed hide their inflationist agenda, and the results we can agree have been disastrous.

[John V]

No rdf,

It was simply time constraints, not ideology. I have neither the time right now, nor the means to watch the video. I was simply addressing what you wrote.

[anne]

Spectator:

"I never said cheap goods from China are not a good thing, I'm all for the benefits they bring. However, this has helped the Fed hide their inflationist agenda, and the results we can agree have been disastrous."

Would an end of inflation resolve inequality, then?

[Goldilocksisableachblonde]

I'm willing to bet that if you went back and looked at the economics literature of the late 1920's , you'd find something analogous to the Broda and Romalis paper , as well as similar junk on the futility of progressive taxation , minimum wages , etc.

It's a sad commentary on the "science" of economics , and it makes FDR's New Deal programs all the more remarkable , since there were undoubtedly high-powered academics who would have been showing him charts and formulas 'proving' that his programs couldn't possibly help.

Maybe the science of economics is actually quite robust , and the problem lies in the capture of so many leading economists by the moneyed special interests , much like the way Big Pharma rounds up leading disease specialists to 'author' ghost-written papers touting their drugs.

Whether its a faulty science or a corrupted science , I don't really care , its of no value to me.

Give me another FDR , and let the economists eat cake.

[David in NY]

Um, I hereby demonstrate that I have never studied economics, but let me explain my problem with the the U. of Chicago guys. Mainly that is that cheap stuff is cheap for a reason! That is, it's no damn good, on a regular basis! So, it seems to me, the notion that the poor are somehow getting more by buying cheap stuff, is looney.

(This post in memory of my mother, who although she had for many years been on the poor side, would insist on buying stuff that was not cheap so that she wouldn't have to replace it every year. When she died at age 89, I inherited many possessions that she had owned for years and years.)

[John V]

No Muirgeo,

As I'm sure you've heard elsewhere...actually, as I KNOW you've elsewhere, it's all a matter of relativity and degrees of "free".

[jult52]

The Megan McArdle blog has a detailled debunking of Warren's research. You may want to check it out. It's from the beginning of May.

[She Make Think She Did, But]

McArdle's debunking has been effectively debunked itself, so if you do check it out, read with a (very) wary eye.

[Icarus]

But...despite the ire of the left, who shirk at anything which implies the wealthy aren't evil...do the poor in the US have more purchasing power today, than they did 30 years ago, because of cheap chinese goods?

Is that much true?

[Bruce Wilder]

David in NY: "cheap stuff is cheap for a reason! That is, it's no damn good, on a regular basis! So, it seems to me, the notion that the poor are somehow getting more by buying cheap stuff, is looney. . . . my mother . . . would insist on buying stuff that was not cheap so that she wouldn't have to replace it every year."

A wise lady, your mother.

I don't like the abstraction "inequality" precisely because it does not get at the nature of the experience of being poor, and living poor.

For me, the framing that emphasizes changes in risk makes a lot more sense. The distribution of risk and income in the economy are intimately related, and the inability to invest wisely in something as simple as a good pair of socks is part of what makes poverty cruel.

[kthomas]

Icarus, what point are you trying to make? I'm curious if you read the article. Anything that comes out of UofChi is suspect, except for the research that comes from thier Physical Sci. dept.

[evagrius]

The Milton Friedman Institute will be housed in what is now the Chicago School of Theology.

Ironic, no?

"But...despite the ire of the left, who shirk at anything which implies the wealthy aren't evil...do the poor in the US have more purchasing power today, than they did 30 years ago, because of cheap chinese goods?

Is that much true?"

Food is up, rent is up, autos are up.

But shoes, TV's, computers are down.

But you can't eat shoes, live in a TV or drive a computer.

[Spectator]

"Would an end of inflation resolve inequality, then?"

Inequality won't go away, but and end to inflation would sure help the poor and elderly who need their meager savings to go the distance. It would reward thrift and savings at the expense of reckless consumption. It would limit rewards to speculators and financial engineers feeding on those ensnared by easy credit. It would promote a society to produce rather than speculate and consume, and result in a much more competitive society.

Guess I don't have to repeat Keynes quote on how inflation is the best way to destroy a capitalist society.

[James]

Until this moment I think I never gauged the cruelty or recklessness of some conservative economists. Have they not done enough? Have they no sense of decency left at long last?

the words still fit after all these years to fanatical liars.

[Stephen Heyer]

anne: “Would an end of inflation resolve inequality, then?”
]
A number of economic commentators have noted that, historically, it seems that the poor do better in a mildly deflationary economy while the rich do better in a mildly inflationary economy. It isn’t ever hard to find reasons why this should be so.

Further, that the natural state of an industrial civilization with improving science and technology is mild deflation (this is assuming no insurmountable resource restraints, a situation that may be ending – hello Malthus).

Keeping Western economies in mild inflation (the publically stated objective of all Western central banks) over the past 3 or 4 decades has required massive manipulation and distortion of the economy.

So, I guess, going to a mildly deflationary economy would not necessarily resolve the problem of inequality, but it would tip the playing field in favor of the poor rather than the rich.

But, not gunna happen! Not going to happen both because the rich and the hope-to-be-rich totally control government and media, and because in university test after test it turned out that even fairly bright humans (university students) are utterly unable to understand the mid to long term effects of inflation.

[Tony Wikrent]

"Cheap goods from China is a mainly positive market phenomenon" until your dog keels over from the glycol in the dog food, or your kid becomes brain damaged from the lead in the paint on his toys.

I don't believe a stream of profanity would serve effectively enough to convey my anger at such blood-soaked apologists as Christian Broda, John Romalis, and John V. They have no shame, and I suspect they have no soul. Let them wander eternally in the eighth circle of the Inferno. But first sentence them to work minimum wage for three solid years before they're allowed anywhere close to a classroom again.

[John V]

^^^ We need a clean up in a isle 4. Tony Wikrent split something. My goodness.

[Noni Mausa]

One thing that cheap Chinese goods offers to mitigate poverty, is to allow the poor to shop as often as the more well to do, shopping being the great North American compulsion.

I stop in at the dollar store for certain kinds of things like file folders, plastic kitchen bins, tennis balls for my tennis crazed golden retriever, and the occasional bizarre knickknack (a paleolithic winged pig is a recent acquisition).

The aisles are almost always jammed with people.

Yet, if all the dollar stores closed overnight what would really be lost? Only the experience of walking up and down in a daze, looking at the parade of colours and shapes. Like the cheaper forms of gambling, cheap shopping is, for the poor, a trance activity. The net financial benefit is a negative number, I think.

Noni

[hittites]

Income level can be objectively quantified. How "rich" one feels is very subjective. Broda and Romalis appear to be confusing these two concepts. As the original post at the top proposed, if all the purchases by low and high income groups were fixed by an external power to be always from a cheap and expensive set of items, respectively, and if the prices in the expensive set went up at the same rate as the income of the high-income group, then the authors might have a point. But we know the real world is different. The high-income group buys the more expensive items not because they have to but they can afford to. Therefore, although they may not feel that they're getting "richer," the undeniable fact is their income is going up, and the income inequality is increasing.

A shorter way to say all this is: Those authors are just full of it.

[prostratedragon]

"Mama's little baby don't like no shortnin' bread!
Mama's little baby likes truffles!
Mama's little baby likes caviar!
Mama's little baby likes all the fine things of life,
All the things that a well-bred person should have!"

Charles Mingus,
"Cumbia and Jazz Fusion"

[Daniel Schmidt]

I think HIttites made a good point about the subjectivity of this study, so kudos.

In addition I'd like to contend that income level alone is also insufficient to accurately track the well-being of different sections of the public. It would make more sense to take income and subtract the costs of necessities (food, travel, housing, etc?). This is the money that can be devoted to schooling, investment, or entrepreneurship, and it is ultimately the money that gives families hope and cohesiveness.

Why people are still even debating this, when I've been reading these statistics for over a decade, is completely beyond me. If they actually had new data to put forth I might listen, but they don't, and it reminds me of no less than Marie Antoinette.

[prostratedragon]

evagrius:
The Milton Friedman Institute will be housed in what is now the Chicago School of Theology.

Arrrggh! (Not that I didn't believe you, but there are enough dadaists around, including me on occasion, that I went to the Maroon and checked.) That's a lot worse than merely ironic, given the Seminary's history of social mission. And the Seminary Co-op Bookstore, which is probably the best all-round bookstore left at least on the South side, if not the whole town.

Combine that news with the U taking over Harper Court and the rest of 53rd Street (remember their glorious redevelopment of 55th St. back in the day?), the increasingly loud mutterings about razing Lake Meadows, and the takeover of a large segment of Washington Park, near the Midway Plaisance, for the "Olympics," and a person really begins to wonder what in the world is going on in Chicago.

Hope the Seminarians manage to make good use of the money, if that's possible these days.

[Betsy L. Angert]

Dearest Mark . . .

I learned about a decade ago , "Reality is perception." Spin is as gold was in Rumpelstiltskin. It can come from hay. I share a few of my favorite quotes. I am not a believer in "facts."
Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.
~ Marcus Aurelius [Roman Emperor, Philosopher]

A theory is no more like a fact than a photograph is like a person.
~ Edward W. Howe [Ornithologist and Writer]

Give the people a new word and they think they have a new fact.
~ Willa Cather [Author]

A fact in itself is nothing. It is valuable only for the idea attached to it, or the proof which it furnishes.
~ Claude Bernard [1813-1878 Leading French Physiologist]

A concept is stronger than a fact.
~ Charlotte P. Gillman [1860-1935, Leading Writer on Women Rights]

I think the truth is fluid. Consider siblings. The way they define parents or their lives differs. The divide between the rich and poor has not increased? Yet, the extremely affluent increased their income with a little help from friends, while the less wealthy . .

America's income gap grows; rich get richer
Wealthiest 20% account for 50% of U.S. income, Census shows
SEATTLE POST-INTELLIGENCER STAFF AND NEWS SERVICES

Over two decades, the income gap has steadily increased between the richest Americans, who own homes and stocks and got big tax breaks, and those at the middle and bottom of the pay scale, whose paychecks buy less.

The growing disparity is even more pronounced in this recovering economy. Wages are stagnant, and the middle class is shouldering a larger tax burden. Prices for health care, housing, tuition, gas and food have soared.

The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the Census Bureau. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent

Jobs and the economy top the list of voter concerns this election year. President Bush touts a strong economy that is growing, but polls find that Americans have doubts and think jobs are scarce. John Kerry is trusted more on the economy, with Democrats talking regularly of "two Americas," divided between the rich and everyone else.

That argument has merit, some private economists say.

"For those working in the bottom half of the pay scale, they're under an enormous amount of pressure," said Mark Zandi, chief economist at Economy.com.

New government data also show that Bush's tax cuts have shifted the overall tax burden to the middle class from the wealthiest Americans.

Admittedly, any one may argue my "facts."

Betsy L. Angert
BeThink.org

[cm]

evagrius: "But you can't (...) drive a computer."

Isn't there "Grand Theft Auto"?

[CasualObserver]

Betsy,

You had me right up until the point where I took one look at the chart in the article and I was reminded of the words of the great philosopher Rick Majerus: "Statistics are like Brazillian Bikinis, they hide as much as they reveal."

[reason]

For some reason this struck me as relevant:
http://business.smh.com.au/pseudo-battlers-should-get-a-grip-20080520-2ghb.html

Seems those the rich are just bad at managing their money?

[disinterested observer]

The other issue here is that while it can be argued that consumption may be a better measure of current living standards than income, the difference between disposable income and consumption is available for savings. People concerned about inequality also point to widening dispersion of wealth.

[save_the_rustbelt]

Wal-Mart does not sell Chinese-made:

retail gasoline (yes, at some stores there is a gas-and-go)
natural gas
electricity
real estate taxes
insurance

Wal-Mart is not nirvana for the working class.

[Real Person from the Real World]

I asked an Irani guy who was selling rugs once, about child labor, and he said that the work just kept the girls busy and out of trouble. My 3rd World Entrepreneurial boss's wife commented to a remark while he was over seas that I hoped he wouldn't be so tired, he would get into an accident, and she comment about how things were different over there, and he would have a proper driver. She also told one of our sales people that she didn't see why I needed my Wal-mart level wages so disparately, after all, I live alone and have no children.

I am sorry to offend the PC in the audience, but people in the 3rd world come from an exploitive mode of business and living. They are bringing these same ideas, along with cronyism and under the table dealing here to the US. China manipulated its currency to sell what can be shoddy goods, to the point that you cannot pick up cheap tools at Menards, without the ubiquitous "made in China" label, or even electric goods at Wal-mart. Sometimes the stuff works ok, for a while, then you throw it away and buy another. But what can you do, if you MAKE only Wal-mart wages? You cannot afford anything else. Cheap is a trap we have bought into. The wealthy can afford to buy cheap or expensive, those of us on low wages buy cheap, so there is lots of cheap, and with cheap, come cheap wages and loss of jobs to overseas.

[Holly W.]

Golly, this kind of garbage just ticks me off no end. I'm sure someone else has pointed this out already, but consumption is not wealth.

As the upper tier of incomes rise, people at the top are able to invest ever-larger amounts of money into a portfolio which then makes more money for them while they do something else -- or even nothing at all. This self-perpetuating money allows people to retire in comfort, leave tidy sums to their children, and buy political influence.

No amount of cheap consumer goods will make anyone wealthy, or gain any power for anybody.

Levitt, Wilkinson, Broda and Romalis should be ashamed of themselves for promoting this kind of propaganda, which seems only to have the aim of trying to convince most of us that we don't really have it so bad in comparison to hedge fund managers, and should quit our bellyaching.

Now, if they would like to take a shot at defending the humongous wealth gap in this country, that might be more entertaining reading.

[cm]

Holly W: As somebody has pointed out elsewhere, there are 2 classes of people, those who have to work for a living and those who don't have to.

Of course, in both there are further stratifications and differentiations by degree, in several dimensions.

[X. Paloverde]

Hello, Externalities, anyone? Leaving aside (as if one could, Mrs. Lincoln )the fact that no one can live inside a lead-painted plastic dollhouse: the 'Cheap Junk" from China is not, actually, truly, cheap. The ecological costs in China have been HUGE, and now we are all starting to pay the bill, via global warming and the massive dispersal of pollutants into the air and seas. No one even knows what the ultimate costs will be to our agriculture, water, and health. Why is this basic, simple concept--that there's no free lunch, even if all it is a crummy old hotdog--so hard for conservative economists to grasp?

[Holly W.]

cm, I wasn't even really thinking about people who don't have to work for a living. There is still a big difference between folks who make enough money to afford nice stuff and who can also make some significant investments without having to severely do without, and those who may have alot of cheap junk but don't collect incomes that are ever going to allow serious wealth creation, no matter how much they save. Maybe I should have left the mention of hedge fund managers out. :-)

The small-scale definition of wealth is knowing that even if you lose your job, you've got enough savings to live on for a while, and you've got some money or other asset that's likely to keep earning something even if you're not working (ignoring ugly market downturns such as we're experiencing right now).

The Levitt et al article seemed to imply that so long as people have access to cheap stuff, they are well off -- but I disagree that having alot of "stuff" is what really determines how a person or family is doing, and I strongly suspect that the researchers don't really think so, either.