As Matt Yglesias likes to say, look at levels, not growth rates

This tweet caught my eye:

Adam Tooze (who I greatly respect) is presenting a widely held view. And he’s technically correct.

But is worry about whether your wi-fi will go down actually equivalent to the “tough start” our pioneer ancestors had?

I guess this is why old people like me become reactionaries. A different frame of reference. Were the old also reactionaries on economic issues back in earlier centuries, when we had a steady state economy? I wonder.

HT: Razib Khan



22 Responses to “As Matt Yglesias likes to say, look at levels, not growth rates”

  1. Gravatar of Will Will
    18. June 2020 at 00:27

    I am neither an old person nor a reactionary, just some grad student goofball. I think what this illustrates is that “inflation-adjusted” growth doesn’t correspond to any kind of real world growth. You take someone today with an iPhone, send them back in time 20 years, and they’ll be considered the wealthiest person on the planet for having a piece of near-miraculous technology (Clarke’s third law: Any sufficiently advanced technology is indistinguishable from magic.) Today, having the same piece of technology is taken for granted and is nearly ubiquitous to the point where most children carry one around like it’s no big deal.

    Intertemporal comparisons of real GDP and welfare are flat-out nonsensical in any setting that has rapid technological change and growth. Whatever measured inflation and measured real GDP are actually measuring, they aren’t measuring what they’re claimed to measure.

  2. Gravatar of Apisith Apisith
    18. June 2020 at 00:55

    I thought you understood that we’re all on the hedonic treadmill, so everything is relative.

  3. Gravatar of Tacticus Tacticus
    18. June 2020 at 03:24

    Ugh, things were so much better during the small pox era! Poor millenials. If only they could use a time machine to go back to the Oregon Trail and experience some real economic growth.

  4. Gravatar of U.Walisser U.Walisser
    18. June 2020 at 04:51

    There’s no need to elevate yourself further nor fear any competition when mediocrity is the norm.

  5. Gravatar of ssumner ssumner
    18. June 2020 at 07:47

    Will, Yup. And that doesn’t mean people are happier, but they are clearly better of in purely materialist terms.

    Apisith. I do understand, it’s the other side that doesn’t.

  6. Gravatar of AnthonyC AnthonyC
    18. June 2020 at 08:47

    I’m right in the middle of the Millennial range, and spent years telling this to people who consistently wondered why I thought it was even relevant. I think I finally get it. A few factors I usually think of:

    1. The ways in which we are materially better off turn out not to be the ones that generate much life satisfaction. We have more and better stuff in many categories, yes. But, we have longer commutes (a side effect of both housing prices relative to income, and to couples needing to find 2 workplaces but 1 home). We have essentially no local community (for many reasons).

    2. There are specific, concrete ways in which we are worse off. The types of cars and housing that were affordable to young people in previous generations are no longer built today (hence the budding tiny house movement trying to compensate) and in some cases are flat out illegal (like zoning laws preventing 3 or more unrelated people from leasing an apartment, for example). Similarly, the types of life that made not having those things feasible in previous generations (living in walking distance to work or close to effective public transit) have gotten much harder. I’m very lucky. My wife and I both have masters degrees from prestigious schools. We share a car and live in a relatively inexpensive town for our region. By our late 20s we just barely managed to buy a house that was built in the 1960s as a starter home for a working class couple in their early 20s.

    3. We as a generation were consistently and systematically misled about what to expect from our lives, and modern media means we can see exactly what that means. We were constantly told that hard work in school was the key to a good life outcome, and basically not allowed to believe that anything else mattered much. Previous generations grew up knowing this wasn’t true, in so many ways, and were at least open about it. That alone is sufficient reason for anger and disillusionment.

    4. The economic growth that is happening accrues almost entirely to the older generations and to the already wealthy (

    5. We are expected to save a lot more for retirement than the previous few generations, despite these problems, further limiting discretionary income, which is what we really notice/feel in day to day life.

  7. Gravatar of Christian List Christian List
    18. June 2020 at 08:55

    According to these dates I am also a Millennial, help me god.
    But I cannot confirm what is written. My environment did not have a tough start, the opposite is true, we have very comfortable, safe, well-paid jobs. I can choose my job from several hundred offerings.

    Finding a good apartment is sometimes very difficult, I see this problem, and buying a house in a popular trend city is pretty far away, but that is also because I don’t like debt and because I don’t want to put all my money in one basket.

    Children seem incredibly expensive though, especially if you earn well. From a purely economic point of view, it doesn’t make much sense for well-educated, high-income academics to have (more) children at the moment, and that is a real pity and bad for any country that pursues such a wrong policy.

  8. Gravatar of bb bb
    18. June 2020 at 09:28

    That may be a German thing. My in-laws in Germany all say having a child is too expensive. Or having more than one is impossible. It’s just not something I hear people say in America. I struggle to understand the mindset knowing that the financial support is so much greater in Germany. We pay for daycare here, and it’s crazy expensive, but we just do it. Maybe you are too wary of debt? For me at least, children is one use of debt that I’ll never regret.

  9. Gravatar of Christian List Christian List
    18. June 2020 at 12:02


    Yes it might be a German thing. Maybe it’s not despite the financial support, but because of that. Somebody has to pay for this huge welfare state, you know.

    The “financial support” is also completely flat, it might be nice for a rather poor family, but it’s not an incentive for a middle-class family at all. And the costs are progressive, not everything is for free, daycare and kindergarten are often free for poor families but for the middle class the costs are progressive in relation to their income. I know families who pay 1000€ per child per month just for daycare.

    Another point is taxes, again the welfare state needs to be financed. I think taxes are simply lower in America. In France it is also the case that children can be extremely well deducted from taxes, if you earn relatively well, then you often pay no income tax at all in France from the third child onwards. There are no similar incentives in Germany.

    Minimum pensions are paid by the state, you don’t even have to save for it. Those who cannot afford a retirement home get it financed by the state as well. Children as safeguard are completely redundant in this German state.

    When you have children, you only pay for the welfare and the pensions of others. From a purely economic point of view, it makes no sense to have children in Germany when you make a certain amount of money. I find it interesting that Germans think so economically in this respect and Americans don’t. Or am I wrong?

  10. Gravatar of Jaroslav Hasek Jaroslav Hasek
    18. June 2020 at 13:10

    Though I think taxpayer funded major league sports stadiums are almost always a rip off for the taxpayers, it is more than a little silly when you hear about how older stadiums cost less when adjusted for inflation and required less tax breaks. well no duh, those old stadiums were also comparatively primitive and require costly upgrades to maintain their viability.

  11. Gravatar of dtoh dtoh
    18. June 2020 at 14:03


    I must disagree.

    1. The ways in which we are materially better off turn out not to be the ones that generate much life satisfaction.

    I don’t know, I think it’s kind of cool that I can talk to family and friends overseas for free (not to mention the live video.) When I was young it was $35/minute. Or the fact that advances in medical technology kept my parents (and 100’s of millions of other people) out or wheelchairs. Those are pretty satisfying. The list goes on and on.

    2. There are specific, concrete ways in which we are worse off. The types of cars and housing that were affordable to young people in previous generations are no longer built today.

    Car what car. Most people (even the well off ones) in my generation spent several years saving to buy a used car. When I was very young, no one had two cars. You think housing is expensive. You should have tried NYC in the early 80s. Of course because everyone wants to live in SFO or NYC now, there are a lot more people complaining about the problem.

    3. We as a generation were consistently and systematically misled about what to expect from our lives, and modern media means we can see exactly what that means.

    “Misled?” You mean you didn’t consider the future in an objective manner. Stop blaming others. Read Aesop on grasshoppers for further info on this topic.

    4. The economic growth that is happening accrues almost entirely to the older generations and to the already wealthy (

    Growth (income) is not wealth. Of course millennials were never good on quantitative concepts so you can’t be blamed for this confusion over economic concepts.

    5. We are expected to save a lot more for retirement than the previous few generations, despite these problems, further limiting discretionary income, which is what we really notice/feel in day to day life.

    No the problem is everyone wants to own two cars, have a glitzy kitchen, eat out all the time, and take nice vacations. Boomers got to eat out once or twice a month when they were kids. I remember in 5th grade when a classmate took a family vacation by airplane. It was unimaginable. We were amazed.

  12. Gravatar of ssumner ssumner
    18. June 2020 at 17:14

    Anthony, My daughter’s living standards are so much above what mine were at her age that it’s like she’s living on a different planet. I won’t bore you with a description of life when I was young, but my daughter is horrified when I describe it.

    Some young people are house poor in certain cities, due to stupid zoning rules. But houses in most of the US have become much nicer. I wasn’t able to afford my first house until age 36.

  13. Gravatar of bb bb
    19. June 2020 at 06:16

    it’s about wealth inequality. Inequality breeds dissatisfaction. I’ve read on this site many times that income inequality is overstated. I think that Matt makes the case that wealth inequality is very real. You are correct about zoning for houses, but that has been true for a while. Millenials are upset because they feel that they’ve been denied the opportunity to acquire wealth like previous generations. Matt provides statistical evidence that they have good reason to feel that way. I don’t think it’s constructive to point out that living standards have risen. Maybe living standards are sticky.

  14. Gravatar of bb bb
    19. June 2020 at 06:26

    I was under that false impression that daycare was free. I think my in-laws enjoy criticizing the US safety net, and maybe they fail to mention things that don’t support that case. That explains quite a bit.
    I do think incomes are too low in Germany. Anecdotally, the Germans I know make considerably less that their US counterparts, and that’s before taxes.
    Daycare in the US is over $1k per month per child. I just accumulated debt during those years, which I think is what most americans do. Not the best solution, but still very worth it in my view.
    Thanks for shedding some light on that.

  15. Gravatar of MJ MJ
    19. June 2020 at 07:59

    According to the hedonic treadmill theory however it is all relative and levels don’t matter. Previous generations saw greater economic improvement in real time and meanwhile millennials are much likelier to suffer so called problems of despair. So boomers may actually be providing millennials a valuable service by blowharding about how easy people have it today.

  16. Gravatar of Christian List Christian List
    19. June 2020 at 08:24


    Yes, that’s my impression, too. You make less money in Germany before and after taxes for the same job.

    I think the basic conditions in very blue states like California and in Germany are often comparable. And then there are even aspects where one has more state in California than in Germany, and vice versa, in areas where you don’t expect it at all. The US compared to Europe is a bit as in that idiom from Thai-English: same same but different.

    Germans often have a very firm, positive opinion of their state and a pretty negative one of the US, although they have never been there. The Germans who actually were in the US usually liked it.

    When I was in the US for the first time, I was surprised at what was so similar and what was different. First you think everything is the same, and then everything is different, and then everything is the same again, and then you see the small differences, and the big ones. And so on. Tarantino described this quite well in Pulp Fiction when he compared burgers: “It’s the little differences. I mean they got the same shit over there, we got here, but there’s little differences.”

    Debt is a no-go for Germans. In German guilt and debt have the same root word and no modern German wants to carry debt aka guilt, it is a question of morality.

    It’s even more so when you have kids. The only really acceptable reason for debt is to buy a classic single-family home. But only very little debt of course, the most part one finances with hard cash.

    For daycare or college or cars or other expenses a “real” German would never take on debt, and I think that makes sense.

    I couldn’t sleep with debt. I have to save money so that I can live for many years without having a job in a theoretical crisis. And now there’s even a real crisis, so it’s comforting to know that you have saved money and don’t have to work for 5-10 years, even if you lose your job. I could never live from hand to mouth.

  17. Gravatar of ssumner ssumner
    19. June 2020 at 10:11

    bb, I assure you that living standards have risen dramatically for people in their 20s.

    Wealth is almost impossible to measure and is an almost meaningless data point.

  18. Gravatar of bb bb
    19. June 2020 at 11:12

    I never disputed that living standards have risen. My point is that relative wealth matters more than actual wealth when it comes to satisfaction.
    Millenials are upset because they think they have not had the same opportunities as other generations. Coming of age during the financial crisis and the following incredibly slow recovery. Now they are hit with a pandemic in prime career development years. And they are surviving a pandemic with toddlers at home.
    I’ve heard you argue that income inequality can’t be measured. Wealth is a meaningless data point. You seem to think that consumption is the only variable that matters, but I disagree. How consumption is funded has a huge impact satisfaction. Paying for daycare with debt causes anxiety. Buying a house you can’t full afford because you know it will be more expensive next year is stressful. I can see that inequality has risen, even if I can’t fully quantify it. I employ quite a few very successful millennials and I can see that they’ve having a rougher path than i did. And they can too. The Bernie phenomenon is not an accident. Is it possible that you just don’t care about inequality?

  19. Gravatar of bb bb
    19. June 2020 at 11:18

    LOL. You are making me sentimental for a visit to Germany. You perfectly describe my in-laws. One thing I notice when I go to Germany is that i constantly break things. Apparently Americans are heavy-handed? It seems that every time I try to turn a knob it comes off.
    I would love to be sitting in a cafe in platz right now, drinking a beer and people watching.
    I do think Germans would benefit by saving less. Unfortunately, the rest of the world is having a great time spending your savings. Great country though. Take care.

  20. Gravatar of ssumner ssumner
    20. June 2020 at 09:25

    bb, You said:

    “I employ quite a few very successful millennials and I can see that they’ve having a rougher path than I did.”

    I know lots of younger people, and they are having an easier time than I did. When in college, I earned minimum wage during the school year and also during summer months. I know students who don’t even have jobs during the school year, and earn $40 and $50/hour as a $#&*% intern during the summer. Yes, one earns $50/hour.

    The younger generation of academics at Bentley earns almost twice what I did when young, even adjusting for inflation. (I earned $22,500 in 1982-83, they start at nearly $100,000)

    So while I don’t doubt your examples, it’s easy to find examples to match one’s perceptions.

    As far as being stressed about money, that’s always been true of young people.

  21. Gravatar of gt gt
    20. June 2020 at 22:32

    Scott #20,

    Perhaps you know an exceptional group of college students, but as a Gen-Z’er (even younger than the mentioned Millennials), none of my college student friends are making more than minimum wage. These friends all come from middle class or upper middle class backgrounds; people from lower class backgrounds are even worse off. (Actually, this was a slight lie: I have a single computer science major friend who has a $50/hr internship at Facebook. However, she is a major exception who proves the rule).

    One of my friends, due to an unfortunate situation with loan providers and unhelpful family is having to pay her way through college (at a fairly cheap public state college). She has to work 50-60 hours a week as a waitress on top of class hours just to afford her tuition. She has next-to-no savings and no frivolous expenses. Eating out once a month is out of her reach and she can’t afford to pay the car ticket that she received in another state (on her car built in the early 90s). She recently had a medical incident and almost had to drop out of school because of the cost of it, even with insurance.

    Another of my friends, who has routine panic attacks about the thought of affording to have children or own a home, was able to afford a rented room in a house half an hour drive from the university. His parents, who already have significant credit card debt, go on routine trips to Hawaii and similar destinations, planning on him paying for their retirement.

    Many advancements that it is possible to buy have now become mandatory. You can’t have many minimum-wage jobs nowadays without a smartphone, for instance. What this achieves is locking up larger and larger fractions of income into specific categories, limiting savings. Simultaneously, while many things are becoming cheaper, the quality is also going down. I can buy three shirts for what used to be the cost of one shirt, but the shirts will last a quarter of the time. And this only works because we’re relying on “cheap” labor both in foreign countries and domestically.

    I of course don’t want to romanticize the past, because the past wasn’t better for plenty of other reasons. Racism, sexism, homophobia, transphobia, and other bigotries are far better now than they were even thirty years, let alone a hundred. Improvements in healthcare are wonderful (even if stagnating). Food availability at grocery stores in much higher now. Your chance of dying in a war have drastically dropped. The holocaust, cultural revolution, and holodomor are things of the past that will hopefully not be revived. And yes, smart phones are pretty fun inventions.

    But despite all of those gains, none of my friends are realistically going to own a home near their possible job sites unless they get it as an inheritance from their parents. This is because jobs are becoming increasingly location specific, driving local house prices up much more quickly than incomes are rising. Looking at my career field, my options in the US are limited to a few major cities, all of which have insane rent costs (going down now because of COVID-19, the only thing that I hoped wouldn’t cause this). A room in a shared house is barely affordable with my state’s minimum wage and impossible with the federal minimum wage. Sure, maybe I could one day afford a mortgage on a house in the countryside, or in the Midwest, but my job would be a two hour drive from it.

    I can get “fun”: eating out, playing video games, watching Netflix, although of course many can’t afford all of those (my friends don’t go out partying because alcohol is too expensive). But I can’t get stability: owning a home, paying for my and my children’s education, or knowing that I’ll be able to retire. And debt isn’t and cannot be a real solution, since that’s just borrowing from our future.

    If you look at it through this lens, is it really surprising that many people want change? Unfortunately, a lot of young people see all of this and decide that Donald Trump and a reactionary stance is the right way to go. Luckily, even more young people are fans of Bernie Sanders, and the democratic socialism movement that he represents. We need to rise up above the “MAGA” logic and recognize that we need to make everyone great. A true rising tide rather than one that floods some boats in the process of bringing up others.

    Oh, and since this comment section can’t be trusted to agree with these things:
    * Black lives matter (and yes, all lives matter but you wouldn’t go to a cancer rally and say that “all illnesses matter”)
    * China is horribly suppressing many people, including Uighur Muslims and the people of Hong Kong, but also many many others
    * India is also horrible suppressing many people, especially Muslims
    * The past actions of horrible dictators, such at Stalin, Hitler, and Mao, should not be repeated

  22. Gravatar of Michael Rulle Michael Rulle
    22. June 2020 at 10:00

    I have to agree that “growth” or at least perceived advancement matters a lot.

    Like drug addicts, we all eventually create “tolerance” for the “things” we have—-so when we are bored with an iPhone, it is because it may as well be a “transistor radio”–which in 1960 had a higher “real” price–more than double an iPhone. The average size of a house is double 1960—but so is the “real” median price—-again, more “tolerance”. So for the “same” real dollars, we can have a double large house and an iPhone instead of a transistor radio and a half size house. But we don’t experience the difference—it is what we expect. We instead compare ourselves to others—that is what we care about. So there are two ways to go—-work real hard etc and try to get”more”—or become more of a “socialist” so one need not worry about who has “more’

    A friend of mine originally from Russia, gets to see today versus 1960—Russia is 1960. She likes America (but rather be in Europe—but she moved here)but believes her friends and family back home are “happier than her”. One would think the opposite would be true—given my tolerance argument. But she says “she works harder, and has a lot more”—but they live easier—don’t feel the need to “have more”. But they do have iphones!

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