r/badeconomics has a recap on why this is just a freshman bad statistics take: https://www.reddit.com/r/badeconomics/comments/i9ycy9/the_br...
For example, the comment mentions that the the "Median Sale prices for new houses sold" is in dollars. Yes, he is correct. But looking up an inflation adjusted median price gives the same result, that house are more expensive than before. So yes, he is right that the graph can be technically misleading, but the point of "WTF Happened in 1971" still stands.
I think there are many midcurve takes, where one would argue how 1971 is wrong, but isn't it the case, in reality - that housing, college, wage, etc. have all been doing worse for a few decades now.
[0] https://www.supermoney.com/inflation-adjusted-home-prices/
There is no option to rent 500 square feet because it's illegal in most cities to have units smaller than 600-750 square feet.
Cui Bono
I think the takeaway isn't that material living standard in the U.S.A. have declined but that they've only increased a little.
Yes and no. A larger share of wages have been diverted to non-wage income, like health insurance especially in the US. There's also increased inequality and issues with trying to measure wages over several decades as the typical household changes -- see "where has all the income gone" [1]
> has house prices not been creeping up
Sure, but this is a separate topic. The dates line up by coincidence. There's a long history of urbanism (zoning, suburbanization, etc.) and migration (immingration and rural -> urban migration) as well as atomizing households (fewer nuclear families meaning need more housing units) that led to this.
The point is 1971 is nonsense even if a lot of the trends over 3-5 decades make sense, but for disparate explanations. And any topic has 2-5 separate subtopics that matter (eg. income is tied to healthcare costs, inequality of capital gains vs labor income gains, etc.)
1. https://www.minneapolisfed.org/article/2008/where-has-all-th...
If anything, it agrees that "something happened" around 1971, and suggests multiple such things.
[1] Edit: to me, "freshman bad statistics" means something like "the supposed trend is an artifact of how it was measured or transformed", but the link doesn't say anything like that -- this label is misleading at best.
>>The change in the trade deficit (graphs 15 & 16) may be linked to the end of Bretton Woods indirectly. The end of the system created floating exchange rates. That allowed every nation to determine it's own monetary policy fully. When that happened many Central Banks behaved badly causing high inflation. The US stopped it's high inflation in the 1980s.
And other real phenomena account for other trends c. 1971:
>>Graph 3 is tricky. It shows how Real GDP per capita has moved away from real GDP per employee. The main reason for that is the introduction of women to the workplace.
And it also agrees that some of the trends did happen, meriting investigation, but 1971 wasn't the inflection point:
>>Take a look at graphs on inequality. Here I'm looking mostly at graphs 1, 6, 8, 9, 10. Notice that the inflection point isn't actually 1971. It's usually some time in the early 80s. Greater inequality between high income earners and everyone else started around then. It's a matter of debate why. A lot of economists believe it's because the modern developed economies rewards high skills more than they did in the past. Notice that the very first graph is misleading because it doesn't use total compensation.
I have a hard time characterizing any of that as a "freshman statistics error".