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American Living Standards: Evidence from Recreational Expenditures

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Dora L. Costa

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Abstract

I use consumer expenditure surveys from 1888-1890, 1917-1919, 1935-1936, 1972-1973, and 1991 to determine whether trends in real income per capita are consistent with trends in recreational budget shares and to establish trends in inequality in recreational expenditures. I find that changes in real total expenditures per capita are likely to underestimate the increase in living standards, particularly during times of innovation in consumer goods and reductions in hours such as in the 1920s and the 1970s and 1980s. Real per capita total expenditures fell by 1.2 percent per year between 1919 and 1935 and rose by 1.8 percent per year between 1972 and 1991. In contrast, trends in recreational expenditure shares imply that between 1919 and 1935 real per capita total expenditures rose by 1.2 percent per year and between 1972 and 1991 by 3.6 percent per year. The bias in conventional measures of per capita real total expenditures may therefore have been 2.4 percentage points per year between 1919 and 1935 and 1.8 percentage points per year between 1972 and 1991. I also find that lower income households experienced a larger increase in living standards than higher income households, perhaps because of decreases in the work hours of lower relative to higher income workers, technological change that lowered the price of recreational goods and created new products that increased demand for recreation, and increased public provision of recreational goods.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7148.

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Date of creation: May 1999
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Handle: RePEc:nbr:nberwo:7148

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Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bruce W Hamilton, 1998. "The True Cost of Living: 1974 - 1991," Economics Working Paper Archive 395, The Johns Hopkins University,Department of Economics. [Downloadable!]
  2. Goldin, Claudia & Margo, Robert A, 1992. "The Great Compression: The Wage Structure in the United States at Mid-century," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 1-34, February. [Downloadable!] (restricted)
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  3. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May. [Downloadable!] (restricted)
  4. Costa, Dora L, 2000. "The Wage and the Length of the Work Day: From the 1890s to 1991," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 156-81, January. [Downloadable!] (restricted)
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  5. Hausman, J. A. & Newey, W. K. & Powell, J. L., 1995. "Nonlinear errors in variables Estimation of some Engel curves," Journal of Econometrics, Elsevier, vol. 65(1), pages 205-233, January. [Downloadable!] (restricted)
  6. Robert W. Fogel, 1999. "Catching Up with the Economy," American Economic Review, American Economic Association, vol. 89(1), pages 1-21, March. [Downloadable!] (restricted)
  7. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1998. "Are Medical Prices Declining? Evidence From Heart Attack Treatments," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 991-1024, November. [Downloadable!] (restricted)
  8. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November. [Downloadable!] (restricted)
  9. Boskin, Michael J, et al, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter. [Downloadable!] (restricted)
  10. Abbott, Michael & Ashenfelter, Orley, 1976. "Labour Supply, Commodity Demand and the Allocation of Time," Review of Economic Studies, Blackwell Publishing, vol. 43(3), pages 389-411, October. [Downloadable!] (restricted)
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  1. Mark Aguiar & Erik Hurst, 2006. "Measuring Trends in Leisure: The Allocation of Time Over Five Decades," NBER Working Papers 12082, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Trevon D. Logan, 2008. "Are Engel Curve Estimates of CPI Bias Biased?," NBER Working Papers 13870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Mark Aguiar & Erik Hurst, 2006. "Measuring trends in leisure," Proceedings, Federal Reserve Bank of San Francisco. [Downloadable!]
  4. Trevon D. Logan, 2008. "Economies of Scale in the Household: Puzzles and Patterns from the American Past," NBER Working Papers 13869, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Stefano DellaVigna & Joshua M. Pollet, 2005. "Attention, Demographics, and the Stock Market," NBER Working Papers 11211, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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