How well off are typical Americans today?
That’s a difficult question to answer using conventional economic statistics like GDP, because over time, GDP has become an increasingly less representative measure of the quality of life that Americans enjoy. That discrepancy hasn’t gone unnoticed, as 61% of the respondents to a survey at Debate.org to the question “Is GDP growth a good indicator of improving quality of life?” answered “No”.
But there is an alternative. Last year, we realized that it is now possible to calculate Irving Fisher’s consumption-based “national dividend” concept, which wasn’t possible in 1906 when he proposed it or for much of the following eight decades, until the U.S. Census Bureau and the U.S. Bureau of Labor Statistics began their annual survey of U.S. consumer expendituresat the household level in 1984.
We now have the ability to track the trends in the economic well-being of the average American “consumer unit”, which consists of American families, single persons living alone or sharing a household with others but who are financially independent, or two or more persons living together who share expenses. The following chart shows the major trends for the nominal average expenditures of U.S. consumer units from 1984 through 2015.
In the chart, we’ve indicated both the total national dividend, which represents the average annual expenditures by U.S. consumer units/households and also what might be described as the “true” national dividend, which accounts for the average amount of that consumption that was financed by debt, and which should provide a good indication of degree to which Americans have sought to attain a particular level of quality of life today at the expense of impairing their quality of life tomorrow, as the bills for their total consumption come due.
We observe a generally rising trend in the nominal data for both the total national dividend and the true national dividend.
