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Could also be that the environment has changed since the original studies were done in 1999-2002.

I know that my subjective well-being was higher with an income of $100K in 2008 than it is with a half-mil+ in 2020. Why? Because the social system around me wasn't crumbling. Pre-GFC it was hard to imagine the degree to which your fellow Americans could end up hating and distrusting each other. $100K/year was a very respectable upper-middle-class income that could buy a house and have plenty left over for savings.

Now, you can be making a couple million a year and only be worrying about who's about to take it from you or whether your assets are going to be worthless in the next financial crash. You're certainly better off with that couple million than without it, though.

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> Now, you can be making a couple million a year and only be worrying about who's about to take it from you or whether your assets are going to be worthless in the next financial crash.

Are you being serious? If you're lucky enough to somehow be paid a couple of million dollars per year, you could work for a small few years and retire without any financial worries at all.

That's an absolutely massive salary, and I don't understand how someone could be getting that amount of income and have any reasonable grounds to be worried about their financial situtation.

The point is the fabric of society is unraveling quickly in 2021 than 2008. What does it matter if you win the career lottery if every neighborhood is covered in feces, sidewalks are full of tent cities, and your fellow man is 1 health crisis away from becoming an other.

One is forced to wonder if making millions and being surrounded by tent cities is somehow correlated. Almost like wealth is being concentrated in the hands of a relative few or something.

I heard on fox news that the money trickles down to poor. Its clearly their fault. They forgot to build in wealth catchers into their tents. \s

This is obviously sarcastic but sadly not far from what some people actually think. And i guess tent cities is where that thinking gets you to.

It matters because you're rich, which means you don't have to live in those neighborhoods.

To add to that - financial wealth is in many ways illusory. If you save up $10M (which in 2000 would've easily been enough to retire on) and it's all in Google stock, that's great while Google remains on top of the world. It can quickly be worth ~$0 if Google's no longer the primary way people find out about things to buy. Employees of Sun Microsystems found this out the hard way - many went from comfortable millionaires to Oracle employees in a decade, if they didn't quit and sell their stocks in time.

The usual answer to this is diversification, but the normal "safe" investments - Treasuries, S&P 500 index funds - are all heavily dependent upon political stability in the U.S. If the U.S. erupts in Civil War, basically all American companies will become worthless. Their employees will be dead and their physical capital will be in rubble, so there's nothing to own.

Did you feel the same way in 2019?

I don't think that was the main thrust of their comment, which comes across as mostly a selfish appraisal of a perceived risk to their riches ("only be worrying about who's about to take it from you or whether your assets are going to be worthless in the next financial crash"), rather than concern about others.

I think that's just the rat race. Wherever you go, there you are. The company you keep at 50k / yr is probably different than at 100k / yr and certainly different than at 500k / yr.

It isn’t a rat race, it is inflation. My dad purchased a house in the city for $30,000 in 1981. No amount of stop-the-rat-race mentality gets me a house for $30,000.

My elder cousin purchased a house in the city for $300,000 in 2001. No amount of stop-the-rat-race mentality gets me a house for $300,000.

Prices have gone up, way more than salaries.

Affordable housing is out there -- quite a lot of it too. My parents paid $140k for their house a few years ago in flyover country. $300k would be going overboard. My mom's a nurse and my dad is basically an account executive for a food distributor in the area -- both thoroughly normal middle class jobs. My guess, though, is many folks here wouldn't be willing to do either of those jobs or they wouldn't be willing to live in middle America. If you want an interesting, trendy job in a hot urban center where you're constantly surrounded by the best restaurants, parks, bars, museums, and more, naturally you're going to need to either make a lot of money or make sacrifices in your life.

> No amount of stop-the-rat-race mentality gets me a house for $300,000.

Note that the median price of a home in the US is somewhere in the $250k - $300k range.

Back in the 50s the beats hung out in North Beach because it was cheap. In the 60s and 70s the hippies all had old victorians out in the Haight Ashbury because it was cheap. San Francisco wasn't some obscure fly-over country place, it was a cool place to be.

Where is cool + cheap now?

Are those kind of people busy hanging out on youtube now?

Are there enough creatives in meat-space to attain the critical mass necessary to generate those places like in the past? Or are many of them staring at their phones all day?

We aren't ready collectively to confront these types of truths about the new way of life we have slowly settled into over the last 10-20 years.

Eastern Europe, especially the Balkans

New Orleans

Montreal

Kansas City

Pittsburgh

I bet you can pick out almost any medium-sized city and find some "cool" neighborhoods that are pretty affordable.

Yeah, but you're comparing a house in the city to a house in flyover country. If you want to make a good comparison, i'd say --

What was the median price of a home in the US in 1980 vs 2020. Then, what was the median salary in the US in 1980 vs 2020. Thats the real comparison.

No reason to note that houses are still cheap in some far off country, thats not really a convincing argument.

> What was the median price of a home in the US in 1980 vs 2020. Then, what was the median salary in the US in 1980 vs 2020. Thats the real comparison.

Per the St. Louis Fed [1], the median American home price in 1980 was ~65k. The median American home price in 2019 was ~320k. That's an approximately 4.9x increase. Also from the St. Louis Fed, the 1980 median American family income was ~21k, and the 2019 median American family income was ~86k. That's an approximately 4.1x increase. So it looks like median house price has increased about 20% more than median salary.

[1] https://fred.stlouisfed.org/series/MSPUS

[2] https://fred.stlouisfed.org/series/MEFAINUSA646N

Yes and the interest rates in 1980 were such that the mortgage P&I payments on a 1980 mortgage were $1106 per $100K borrowed vs $422 per $100K @ 3% today.

65K borrowed in 1980 cost $719/mo. 320K borrowed today costs $1349/mo (both are principal and interest only).

$719 in 1980 is $2258 in 2020.

[0] https://fred.stlouisfed.org/series/MORTGAGE30US - I picked 13% as an approximate (somewhat low even) average rate for 1980.

[1] https://www.usinflationcalculator.com/

Yeah the "whats my monthly" being about the same doesn't quite capture what's happening though.

Compare what happens when you get a raise or a small windfall and try to pay your mortgage off early.

I'd pick "small amount, high interest" over "massive amount, low rates" if that were an option.

That option requires governments to not be printing massive amounts of money, though.

I am planning to refinance again (back to a 30-year mortgage) and won't be in any hurry whatsoever to pay it off early. Borrowing money at 3% nominal with the (hopeful) prospects of economic growth allowing inflation to return means that I expect/hope to be borrowing that money at negative real rates in the back half of that loan.

Something else to consider: how does the median house today compare to the median house then? Is it bigger and better? Same? Worse? Perhaps expectations have changed in 40 years.

The question is :will the accounting job still be there in five years? Or will the office or job) move to the city?

Thats what's happening the last five years.

That's just the world shifting around.

I wish I could find the source, but I read a quote from someone that grew up back around the turn of the last century.

She said, "I never thought I'd be so wealthy as to have my own automobile. And I never thought I'd be so poor to not afford any servants"

Also, housing prices are highly regional. My brother bought his first house (4 bed, 2 bath) in our hometown for $58k about five years ago. Now he lives in a similarly sized house on 20 acres of land that he paid $200k for.

I live in a more populated area, but I also bought my house (3 bed, 2.5 bath) three years ago for $100k.

Its automation / systemization / manufacturing vs. limited throughput.

Cars can be built on assembly lines, mostly by machines, with very few humans doing the labor, and thanks to the speed of manufacturing, many millions can be built every year.

How do you "build" servants? Right now, a Mommy and a Daddy have to romp around until Mommy gets pregnant, then it takes 18 years and 9 months minimum to build that servant. But what about the systems in place to identify top talent and utilize that servant better? What happens if that servant is tested and has a 140 IQ. Well then we need her to be a nuclear physicist, or a cardiovascular surgeon, or an AI researcher. She's wasted as a servant, and we can't afford to waste our resources in the modern world.

The problem with Agatha Christie's quote is her outdated understanding of the world. In 1910, when Christie was 20 years old, the smartest person born to the lowest class of British society had precisely dick-all chance of rising to become a Fellow of the Royal College of Surgeons, even if it was clear to everyone he interacted with that he could easily do the requisite work.

I suppose one day someone will say, "I never imagined I would be rich enough to afford a robotic kitchen, but too poor to live on Mars..." or some such nonsense.

I believe the person who said that was Agatha Christie.

As to measuring inflation generally via the proxy of housing, the relationship is confounded by regulation that subsidizes demand and restricts supply, especially in cities like SF & NY, which is almost guaranteed to raise prices. In lots of other arenas, e.g. access to fresh food, real prices have gone down over time in America.

And just goods in general, but a lot of jobs with it as a lot of retail markups were from retail inefficiencies.

Now you’re increasingly < 10 miles from a Walmart and Amazon will deliver nearly everywhere.

15 years ago, a lot of this was still accessible, but you’d have to plan your Walmart trip or trudge through eBay or umpteen online retailers to cut out the b&m markups.

Interest rates have crumbled since then and dramatically so.

That 30k is around 85k today. Interest rates then vs today would make for the same monthly payment in actual dollars of around $500/month. $500/month in 1981 is like $1400 today. This would mean the house should be worth around $300k today at today’s interest rates.

Of course the location may be more or less in demand which greatly influences price.

Where I grew up the houses are more expensive than in the 80’s but the location isn’t in demand so the inflation and interest adjusted cost is well below the cost back then.

I recently saw a graph of the average monthly mortgage payment in the UK (a country where house prices have rocketed in the last 30 years). The average monthly mortgage payment has basically been flat over the last 30 years so I think your point is absolutely correct - affordability on a monthly basis hasn't budged.

But the house could be bought quicker with bonuses from work for example.

Those extra down payments are worthless now..

Possibly but would bonuses be adjusted too?

I do think the down payment is more difficult for many people today. The solution to this was to allow less than 20% down. But then the borrower has to pay PMI until they have 20% equity. There are tax rebates for first time buyers too.

People need more discipline in saving and investing and looking for smaller places in areas with less demand. Get into the market and build equity and scale up over time.

In major cities in the US it absolutely has, even given the decreased interest rate.

Right - cities have been “revitalized” which has driven demand. Values have stagnated in other places like many suburbs.

I think the main issue with housing prices is some people can’t afford to live where they want to live. And there’s some legitimacy there as people don’t want a long commute for various good reasons. But it boils down to people not being able to finance the lifestyle they want. Hence gentrification where those with limited means move into areas currently populated by people with even less means. And of course that has its own opponents who also generally oppose new development oddly enough.

Maybe remote work will loosen the demand to live in a handful of expensive cities?

For housing there is usually more to the equation than just inflation vs salary.

When my parents got their first house in the 80s, I think the interest was just shy of 20%

If I buy a house today, I can literally get 0%* interest on the loan.

20% interest over 30 years means you have paid almost 6 times the value of the loan with your last payment.

So if they could afford the house at 20% interest, they can afford it at 5 times the price with near zero interest.

This has been one of the main factors for pushing house prices way faster than salary growth. The monthly payment can grow (somewhat) with salary while the sticker price on the house can grow much, much faster.

* Don't live in the US, but house prices in the EU are just as crazy as anywhere

This reads similarly to me as conversations that justify medical bills being so high in the US when there’s a closed loop between the those charging and those paying (ie, not the one receiving medical care). “You should be thankful that we saved you 99.5% of this artificially high price tag even though we’re complicit in its fantasy pricing!”

Medical service doesn’t exist for the industry on top of it. Housing doesn’t exist for the industry built on top of it. I wish our government considered the well-being of the host nearly as much as the parasites rather than asking Mr. Mosquito what he thinks would be beneficial.

Back then you cold use your bonus payments, holiday money, Christmas money, whatever to pay the credit WAY faster.

Now, you would save two months of payments..

Based on your username I’m assuming you’re around NYC. My wife is from West Islip on Long Island and faced a similar quandary as she was coming of age. $2000 a month to rent a crappy apartment in the mid 2000s, so she moved out to the Kansas City metro area. We bought a 2200 square foot house in the suburbs that cost us $245,000 just a few years ago, maybe $300,000 now.

I’d say the stop-the-rat race mentality is to move to a smaller city, unless you’re literally working on Broadway or some job that’s uniquely tied to a large city, there’s plenty of jobs and lots of space out in flyover country.

Then the rat race intensifies for those originating in the smaller cities.

> No amount of stop-the-rat-race mentality gets me a house for $300,000.

Many many houses, including mine, cost less than that. Some of them cost an order of magnitude less. If you're not considering moving out of a city with fancy tech career prospects a viable option, then you are possibly not understanding the concept of a rat-race.

The problem is corporations: they want employees clustered in hubs, not wfh, where they cannot "control" them.

Aside from a couple tech companies out there, good luck trying to relocated and wfh in the mid-west.

I do think corps are part of the problem, but not necessarily due to control. Cities are self-reinforcing growth due to the inherent chicken-and-egg problem regarding jobs and companies. Companies don't want to move to the boonies, not enough workers. Workers don't want to move to the boonies, not enough jobs. And everyone wants to be close to universities, because networks, while universities aren't willing to spend resources to move. This was already the case before telecommunication became as advanced as it did in the recent 15 years.

WFH might help break the cycle to some degree, but the majority people will still be in cities (by virtue of, well, being a city), which creates incentives for younger generations to go there (dating + outgoing life), even for those who would rather settle outside the city once they find a partner.

Baked into this theory is the belief that people only live in cities for job prospects, and not because they want to for every other part of their life. The belief is untrue at least for me and everyone I know.

Observer's bias? Of course you observe people in that situation, because of where you are.

I agree though, that folks also live in cities by inertia. They've always lived there, and don't know any better. Even though they've got problems getting employment and housing, they can't see any solution. That's a demographic too.

Oh it’s very clearly observer’s bias, I don’t mean to suggest otherwise. That’s exactly my point. I just wanted to push back on the idea that there are two kinds of people - those who don’t live in cities, and those who live in cities reluctantly.

Working from home seems to have a similar narrative on hacker news I’ve found, probably for similar reasons - either you work from home happily or you reluctantly go into the office.

I relocated and wfh in the midwest. It's not been hard at all.

> No amount of stop-the-rat-race mentality gets me a house for $30,000

30 year old 1 room apartments in small town Hokkaido. Just saying.

For all the folks commenting "oh, but you can still buy a house for 30,000 in XYZ city" -- no, when calculating inflation you have to compare likes.

If a loaf of bread cost $0.10 in the US in 1950 and now you're like, well a slice of bread in Vietnam still costs $0.10, thats not really a good argument.

It is more like saying, "a loaf of bread in 1950 cost 10c, and you can buy a loaf of bread for the equivalent in today's dollar. But if you want that brand-name bread that people are out-bidding each other to buy, it is going to cost quite a bit more"

You can get nice house for $300,000, just not in a major metro zone. It works if your "stop-the-rate-race" mentality includes moving to a rural area. Especially if you leave CA or NY.

You definitely don't even have to leave NY State, just the city and its environs. Rural Upstate NY has more in common with rural PA than it does with, say, Westchester or the Hamptons. Or even with most of MA.

I bought my house about 4 years ago for 162K, and am about 45 minutes from a major Midwestern city (Chicago). Plenty of shopping and entertainment, high speed internet, recreation all within reach. Tech salaries are around 6-figure for many jobs (systems engineer), higher for developers. Oh, and if I felt like doing handy-man work, I could have gotten a house for 90K (would be livable, but require renovation to make it "good").

Exactly. Some prices have just gone up way more disproportionately, like housing, making it difficult to compare to older metrics.

For all the folks commenting "oh, but you can still buy a house for 30,000 in XYZ city" -- no, when calculating inflation you have to compare likes.

If a loaf of bread cost $0.10 in 1950 and now you're like, well a slice of bread in Vietnam still costs $0.10, thats not really a good argument.

Not neccesarily. Only if you're the sort of person who values money and chooses to asscoiate with people based on how much money they have. Of course people with lots of money do tend to be people who value having lots of money. But not always.

That's sort of the point of it though, right?

If you equate your income with your self-worth, then you'll never feel that you have enough.

If you can step outside that framework, you'll find that you may still make significant money, but it doesn't really matter so much.

Would your experienced well-being have been higher in 2008 with half-million in income? Would your experienced well-being in 2020 be lower if you were making $100K/yr?

I suspect the answer is yes to both, from which I conclude "2020 was worse across the board by important stability measures that you value, but for any given year, $500K in income is better than $100K."

> Would your experienced well-being have been higher in 2008 with half-million in income?

Probably not by much. All I really wanted was a basic place to live, enough food on the table, and a reasonable expectation that that'd continue into the future. My job was already doing what I would do for fun beforehand.

"Would your experienced well-being in 2020 be lower if you were making $100K/yr?"

Yes, because those things - food & housing security - are increasingly precarious on $100K/year now. You can still live on $100K/year in the Bay Area, but you're a couple years of rent increases from being priced out, and forget homeownership.

Semi unrelated, but is FAANG still a comfortable path to such income? I've been debating between doing FAANG or starting my own business for years and the wavering hasn't done me any good.

If it's still possible to make 500k+ working at FAANG now that stocks aren't increasing so rapidly, I need to get on that right away :)

Yes. $500K+ is roughly L6 at Google or the equivalent at another FAANG. It's quite a bit easier and less risky to get to that level than to start a business that nets $500K+ annual profit. (Believe me, I tried.)

Yeah that's what I'm realizing. I'm getting too old to gamble again. I think a remote FAANG job would be my best choice.

How high is L6? I've got about a decade of experience, I heard most don't make it beyond L6 but it's all rumors.

L3 is new grad. L4 is "terminal" in that there's no explicit up-or-out pressure beyond that point. L5 is senior, and I'd say most people don't make it beyond L5 without intent. L6 has a few shifts from prior levels. Notably that a high performing L3 is an L4 and a high performing L4 is an L5 (usually), but simply performing well at L5 isn't enough to get to L6, the scope of work and goals shift between L5/6. You generally won't be considered for L5 without 10+ yoe, as I understand it, although internally you can reach it faster.

This new paper actually makes conclusions that are the opposite of what their own data shows:

> Two things to note here. (1) the x-axis is logarithmic. There's a HUGE difference in income between the rightmost points. (2) the y-axis spans a TINY effect size. And TINY / HUGE = EVEN TINIER. 3/7

> A randomly sampled highest-income participant ($480.000) would have lower well-being than a randomly sampled lowest-income participant ($15.000) 25% and 33% of the time for the two outcome measures. Income explains 1.5% and 4% of the variance. 5/7

* https://twitter.com/jonaslindeloev/status/135383426475696537...

* https://lindeloev.net/new-pnas-paper-income-is-a-poor-way-to...

GFC?

Global financial crisis, presumably.

How can someone take take your income from you ? Assets aren’t income. All assets have a carrying cost / risk, it’s always been that way.

Lose your job, lose your income. That happens increasingly frequently as the pace of change heats up in various industries.

I would think people whose labor is worth $2 million per year also have options, starting with self employment

Not better ones. Self-employment leaves you more exposed to the randomness of the marketplace, not less.

The fewer options you have the riskier your current position. True with income as with assets I guess.

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