Everything Is Amazing and Nobody Is Happy

Comedian Louis C.K. does a great skit showing how oblivious we can be when complaining about our lives.

We get frustrated when our cell phone reception goes out for 30 seconds without realizing how amazing cell phone technology is. "Can you give it a second?" Louis asks. "It's going to space. Can you give a second to get back from space?"

"The worst cell phone in the world is a miracle," he says. "Why are you so mad at it?"  

It's a wise question to ask. When something doesn't work perfectly but is still much better than it used to be, you are better off. Our perceptions and emotions play an evil trick by convincing us otherwise. 

"Everything is amazing and nobody is happy," Louis says.

This could apply to the U.S. economy, too.

Everywhere you go these days, gloom wins.

"Jump in percentage of those saying things not going well," reads one headline.

"Americans see more doom and gloom in the economy," writes another.

"Americans Are Pessimistic, Miserable and Completely Fed Up," warns another.

A lot of Americans are in bad shape. Their problems are worse than bad cell phone service. They're unemployed, uninsured, underpaid, underappreciated, overmedicated, and overpromised.

But this is nothing new. It has always been true. And by most measures, most Americans live in a better, safer, more prosperous world today than they could have dreamed of a few decades ago.

These are the good ol' days
Take income. You've probably read about how average household incomes have declined since 2000, adjusted for inflation. It's a scary statistic. 

But it needs perspective.

2000 was a fantasyland bubble where dynastic wealth could be created with fake dot-com companies in your parents' basements. Same with the ensuing years, when teenagers became overnight real estate tycoons. Those were the aberrations, not today. Benchmarking success to bubble years gives an inflated sense of reality.

If I say the average family earns less today than it did in 2000, it sounds depressing. If I say the average family earns more today than it did in 1995, you get a much different view.

Source: Bureau of Labor Statistics.

Do you remember 1995? It was awesome. We were in awe of how prosperous the country was. Consumer confidence was near a multi-decade high. "Our economy is the healthiest it has been in three decades," President Clinton said in his State of the Union address that year. "We have the lowest combined rates of unemployment and inflation in 27 years. We have created nearly 8 million new jobs. America is selling more cars than Japan for the first time since the 1970s. And for three years in a row, we have had a record number of new businesses started in our country."

Sounds wonderful.

And folks, the average American family earns more today than it did back then, adjusted for inflation. 

Go ahead, argue that 18 years of near-stagnant real incomes is a failure. I hear you. Just realize that 2.8 billion people around the world earn less than $2 a day, and you're upset that we aren't richer than we were when we were already rich and felt like kings. "First-world problems," as they say. 

And it's misleading to say the average household only earns a little more than it did in the 1990s. It actually earned quite a bit more in total compensation; it's just that more of its compensation comes from employers paying for ever-growing health insurance premiums. Total compensation per hour -- which includes things like health insurance and 401(k) matches --  has done great over the last 40 years:

Source: Bureau of Labor Statistics.

What are we getting in return for rising health insurance costs?

More life.

"Americans have come to view death as optional"
The average American born in 1950 could expect to live to age 68. The average American born in 2010 can expect to live to almost 79.

Source: Centers for Disease Controls actuary tables.

Think about that: In two generations, the average American gained a decade of life expectancy.

Do you know what can happen in a decade? A little more than 10 years ago, AOL dominated the Internet, oil cost $13 a barrel, Fortune magazine named Enron one of America's "most admired corporations," and Apple was a joke. Everything can change, in other words. You get an extra one of those now.

Minorities have made even greater progress. African Americans have gained 15 years of life expectancy since 1950.

Odds are this will continue. Biomedical gerontologist Aubrey de Grey thinks the first person to live to see their 150th birthday is already alive. As San Francisco Chronicle columnist Jon Carroll joked, "Americans have come to view death as optional."

The biggest reason life expectancy has gone up is because childhood mortality has plunged, from 32 per 1,000 in 1950, to 19 in 1970, all the way down to six in 2012.

How often do we have BREAKING NEWS when stocks fall half a percent? Several times a week. But no one ever says, "Breaking news: Far Fewer Children are Dying Than Used To." We ignore the really important news because it happens slowly, but we obsess over trivial news because it happens all day long. This is another evil trick our minds (and media) play on us. 

Not only are fewer children dying, but older Americans are experiencing something they couldn't dream about a few decades ago: retirement.

You get to wake up and literally do anything you want
We constantly worry about the looming "retirement funding crisis" in America without realizing that the entire concept of retirement is unique to the last five decades.

It wasn't long ago that the average American man had two stages of life: work and death.

Even in the nostalgic 1960s, more than 40% of men age 65 and over were still working or looking for work:

Source: Economic History Association, Bureau of Labor Statistics.

Think of it this way: The average American now retires at age 62. One hundred years ago, the average American died at age 51.

Poverty among the elderly has plunged, too. More than a quarter of those over age 65 were living in poverty in the 1960s, compared with less than 10% today. Medicare has only been around since the 1960s. Before that, as one 1963 Social Security report put it, "paying for necessary health services and providing adequate insurance for non-budgetable expenses remains beyond the economic capabilities of most aged persons." As Frederick Lewis Allen wrote in his 1950 book The Big Change: "One out of every four families dependent on elderly people and two out of every three single elderly men and women had to get along in 1948 on less than $20 per week [$188 in today's dollars]."

The job market Americans are retiring from has changed dramatically, too -- largely for the better.

Perhaps you've heard about the laborforce participation rate falling over the last few years. It's true -- it's declined, though largely due to demographics.

But a higher percentage of American adults are working or looking for work today than were in the 1950s, 1960s, or 1970s. That's mostly because more women have entered the laborforce. And why did they enter? Because for the first time in history, they were treated as somewhat equal to men. The economy was excellent for white males in the 1950s and 1960s, but as Stephanie Coontz recently wrote:

In most states, his wife could not have taken out a loan or a credit card in her own name. If she wanted a job, she had to turn to the "Help Wanted -- Female" section of the classifieds, where she might learn, as one 1963 ad in this newspaper put it, that "you must be really beautiful" to be hired. In 42 states, a homemaker had no legal claim on the earnings of her husband.

The workplace has become safer, too. In 1975, there were nine cases of occupational injuries or illness per 100 full-time workers per year, according to the Bureau of Labor Statistics. By 2009, it was fewer than four.

Employers now allow their workers to have a life outside of work, which not long ago was a charming but unrealistic concept. Frederick Lewis Allan described working life in the first half of the 20th century:

The average working day was in the neighborhood of 10 hours, 6 days a week. In business offices there was a growing trend toward a Saturday half holiday, but if anyone had suggested a five-day week he would have been considered demented.

According to the Dallas Federal Reserve, the average work week has declined from 61 hours in 1870, to 48 hours in 1930, to 40 hours in 1950, to 39 hours today.

We're using that extra time to have fun. The average American household now spends three times as much of its income on recreation as it did in the 1950s, according to the Consumer Expenditure Survey. The average employee with five years on the job receives 22 days paid vacation and holiday pay per year, up from 16 days in 1970, according to the Bureau of Labor Statistics.

The list goes on and on:

  • In 1950, the average household spent 30% of its budget on food. Today, less than 13% of an average budget has to be devoted to food.
  • High school graduation rates are at the highest level in 40 years.
  • Traffic deaths per 100,000 people have fallen by half since the 1960s.
  • The median new home today is 34% larger today than it was 25 years ago.
  • 49% of new homes had air conditioning in 1973. Today, 89% do.
  • Nearly 30% of Americans over age 25 have a bachelor's degree. In the 1960s, less than 10% did.
"Today," Matt Ridley writes in his book The Rational Optimist, "of Americans officially designated as 'poor,' 99 per cent have electricity, running water, flush toilets, and a refrigerator; 95 per cent have a television, 88 per cent a telephone, 71 per cent a car and 70 percent air conditioning. Cornelius Vanderbilt had none of these."

I'm not arguing that inefficiencies, injustices, and inequalities don't exist today. Of course, they do. But they always have, and by comparison, we are living in one of the most prosperous times in the history of this world.

We have a lot to be thankful for.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics. 

No Pitch


Read/Post Comments (105) | Recommend This Article (243)

Comments from our Foolish Readers

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  • Report this Comment On November 29, 2013, at 12:43 PM, dstwhit wrote:

    Fantastic article. Thanks, Morgan!

  • Report this Comment On November 29, 2013, at 1:01 PM, ObserverOnHill wrote:

    But Louis, you don't understand the meme. If it was revealed that things are actually OK then we might realize the we do not need government to protect us from all the bad.

    Speaking of bad, hows the Affordable Health Care Act working out for everyone who was actually fooled enough to vote this guy in for a second term ?

  • Report this Comment On November 29, 2013, at 1:04 PM, TMFTopDown wrote:

    Excellent article, Morgan!

  • Report this Comment On November 29, 2013, at 1:25 PM, Mathman6577 wrote:

    Great article.

    Speaking of the naysayers and the doom and gloom crowd:

    When new data comes out someone always compares U.S. life expectancy and health care spending to that of Japan, China, Europe, etc. and concludes that our "system is inferior".

  • Report this Comment On November 29, 2013, at 3:37 PM, Megatron916 wrote:

    Phenomenal article! I appreciated this very much.

    Thank You!

  • Report this Comment On November 29, 2013, at 4:03 PM, Chontichajim wrote:

    It is hard to measure "living above your means' and that is probably the greatest contributor to complaints and inability to retire. We need to keep our blinders on to what marketer's of all kinds tell us we can afford, and make those decisions based on reality.

    Then enjoy 20 or more years of healthy retirement and watch your savings continue to grow while you dip into the dividends/interest.

  • Report this Comment On November 29, 2013, at 5:29 PM, TopAustrianFool wrote:

    Awesome article Morgan!

    Dig out the article you wrote during the Bush presidency years that is as optimistic... Show to all that you are always optimistic.

  • Report this Comment On November 29, 2013, at 5:30 PM, parsix2 wrote:

    On this Thanksgiving weekend, all of us should apply the attitude of gratitude in all aspects of our life. Our complaints are quality problems for so many others.

  • Report this Comment On November 29, 2013, at 5:32 PM, sevenheart wrote:

    I had more disposable income when I was earning $7.50/hr in 1975 than I do now with my wife and i earning $145k. My mortgage was $146, my car insurance was $12/month, car payment was $55/ month, my student loan was $30/month, etc., my employer paid my whole family health insurance premium, I had paid holidays and paid vacation, not so anymore. Sorry Morgan, inflation numbers are so manipulated there can be no adjusted comparison. (And lest anyone think I'm up to my eyebrows in debt- I only have 5 years left on a $1200/month mortgage, no debt and a comparatively very high cost of living.) We supposedly live in an era of low inflation, but buy a 5 lb bag of sugar, sorry you can buy 4 lbs for the same price as 5 years ago. Notice your toilet paper roll has gotten narrower? Notice your cereal box is something like 14 ounces net content now instead of 16? Ah yes- stealth inflation, but the numbers are rosy, life has never ever been better.

  • Report this Comment On November 29, 2013, at 5:39 PM, sevenheart wrote:

    I can't help but make this notation- the Wright Brothers used their 6th grade education to design a new propeller for aircraft. I work with college graduates who are stumped by fractions and can't write a coherent sentence. Sure graduation rates are up, but education is not.

    My grandfather only completed 3rd grade in 1924 and could read at a higher level than most high school graduates today.

  • Report this Comment On November 29, 2013, at 5:39 PM, rafish wrote:

    I expect better analysis MF. This is fluff.

  • Report this Comment On November 29, 2013, at 5:52 PM, thecinimod wrote:

    Hi Morgan,

    I think your larger point is right on (and one I preach on a regular basis), but I have to take exception to some of the arguments you're making, especially the numbers you're using.

    I have two main points: 1 - Mean is an inferior metric for financial matters, because there are some heavyweights at the top that skew the distribution a lot. In financial matters, especially talking about the "average experience" of a population, we should be using median.

    2 - Incomes are not as important as net worth, and when you look at that, it shows a substantially different picture. Net worth represents safety, security, retirement, and the ability to smooth the vicissitudes of life. Your income can be gone in just two weeks notice, or less. It's too unstable to count on as risk protection.

    When we look at median net wealth, we get a dramatically different picture. The recent downturn has thrown us all the way back to the 1960s. There is a great article, and especially the first graph, over at The Atlantic from last year: http://www.theatlantic.com/business/archive/2012/12/the-rece...

    The reason everyone is talking doom and gloom is because most Americans' safety reserves have been gutted. We have 47 million people on public assistance. Unemployment is still impressively high. There are many, many more people in trouble than there have been in a long time. We've lost over 40 years' worth of economic progress in the middle class.

    That said, Americans are still tremendously well off compared to a huge chunk of the world. But things here are worse than they have been in a long time.

  • Report this Comment On November 29, 2013, at 6:00 PM, vagiroux wrote:

    Excellent article! I always smile when "kids" complain about how hard they have it. Now I have data to laugh out load. Thanks

  • Report this Comment On November 29, 2013, at 6:00 PM, TMFHousel wrote:

    thecinimod,

    Two rebuttals:

    1) Real median net worth was the same in 2010 was it was in 1992, and 20% higher than it was in 1962.

    2) Since 2010 the stock market is up 50%, nationwide home prices are up 13%, and household debt is down 3%. The Fed only calculates real median net worth every few years (2010 is the latest) but we know a more up-to-date figure would be far above 2010's level.

    Thanks for reading,

    Morgan

  • Report this Comment On November 29, 2013, at 6:00 PM, herberthoover70 wrote:

    Is the glass half empty or half full ? You will not change a positon here on one article .. For me im still alive at 70 , and life is still good for all the ills i have..

    I spend most of my entertainment time on the internet with NO TV at all.. My adopted country is the Philipinnes. I just sent to one of my friends $ 45.00 total , and they rebuilt a small house for that amount , having lost all in the last typhoon there. Imagine my $ 45.00 paid for plastic sheeting, wood, and nails, and she is happy. OMG Anohter of my friends had to move with 4 feet of water in the first floor of her residence.

    Let those complain , complain. for me Im living in the best country in the world, with all its problems

    Just Ray of Phila fat, dumb and happy PS nice article

  • Report this Comment On November 29, 2013, at 6:03 PM, common69sense wrote:

    I agree with much of what you have indicated assuming one is in the top 10%.

  • Report this Comment On November 29, 2013, at 6:07 PM, LairdMike wrote:

    Great article Morgan. It really puts the griping and moaning in perspective. Shock capitalism and the media giants need a constant state of fear and worry to sell ad space.

    Like you, for all our imperfections, I think we are living in a golden age.

    Happy thanksgiving.

  • Report this Comment On November 29, 2013, at 6:15 PM, fc wrote:

    I agree with most of the article except for the undue stress on the importance of longevity. Rather than focussing on a long lasting old age I believe that we (i.e, medical research) should strive to prolong youth.

  • Report this Comment On November 29, 2013, at 6:21 PM, wjcoffman wrote:

    Anyone aware of studies that compare the effect on sales of negative headlines vs positive headlines? Negative must sell better.

  • Report this Comment On November 29, 2013, at 6:38 PM, cmalek wrote:

    Sophistry, not a meaningful article. With the choice of proper data points, or charts in this case, any viewpoint can be rationalized or substantiated.

    I, like sevenheart, was better off in the 1970s then I am now. My family income is about 5 times what it was in the 70s but my expenses are even higher. And no, I do not owe a McMansion mortgage and live beyond my means. Steak that I was paying 59 cents/lb in 1972 is now in the $4-$5 range. Sugar went from 59 cents for 5 pounds to $2.99 for 4 pounds. I was paying 26 cents for a galon of gasoline in December of 1972. Now I pay $3.69. A CARTON of cigarettes was in the $2 range. Now one PACK is over $10. And on, and on, and on. My income is now 5 times greater but prices are 7, 10, even 15 times greater. I'm sure that some wise guy can inflation adjust the prices and show that I am way better off today than I was in the 70s but that is just playing with numbers. And according to engineering calculations, a bumble bee is not able to fly.

  • Report this Comment On November 29, 2013, at 6:55 PM, theomaximus wrote:

    Rafish wrote " this is fluff". WRONG. I wish it were. It is the best conservative argument I have heard since William Buckley. I wish I had the intelligence and wherewithal to rebut, but I don't, not tonight. Somebody out there help me.

  • Report this Comment On November 29, 2013, at 6:59 PM, awallejr wrote:

    Morgan I suppose it is all about one's point of view to a certain extent. Sure a family of four just barely maintaining a household has it way better than some starving African.

    There are absolutely plenty positives out there. But I am sorry this Country is diverging more and more every year.

    Charts in #15 haven't really changed

    http://caps.fool.com/Blogs/ceo-greed-still-abounds/873945

    Middle Class has been shrinking for decades. 1 in 5 in NYC don't have enough for food. Employees today picketed Walmart and some smug, clearly well fed and paid, analyst shook his head at those being paid $8 an hour sneering if they don't like it find another job. Yes let them eat cake too!

    I am sorry but the rich get rich and the poor get poorer. We have had one of the biggest transfers of wealth in all the world from the masses to a small percentage of the population.

    I don't see this trend changing. I am certainly not "anti stock market" since I have been here for years now giving ideas and taking them. But I am not going to turn a blind eye accordingly.

    I have told people here now for years what Bernanke was going to do. And he did it. Without him you think the market would be where it is now? Of course not, we would be mired in a deep depression.

    This bull run had more to do with Bernanke supporting the banks and keeping cheap money for years to enable those banks and corporations to deleverage and restore their balance sheets. But that is as far as he can go. It will take a sensible fiscal response from Washington to actually try to grow the economy at a more healthy clip (along with immigration reform). But put me in the gloom camp on that one.

  • Report this Comment On November 29, 2013, at 7:16 PM, KenC42 wrote:

    At this time of Thanksgiving we all benefit from the reality check provided by this wonderful article. Keep up the great work.

    .

  • Report this Comment On November 29, 2013, at 7:33 PM, mythshakr wrote:

    So just what is “happiness”? Is it living longer? Is it living healthier? Is it more toys? It is none of those things to me. Just because I am here more days surrounded by more stuff and not being ill does not make me happy. That’s just blah.

    Back when I was in college I was given the statistic that over 70% of the population only works to pay the bills to do the things they want to do. They do not enjoy what they do. They spend 1/3+ of much of their life doing things they receive nothing in return for other than a paycheck, just to pay the bills.

    I think that statistic still holds. In my 35 years in the working world I never enjoyed or felt happy doing what I was doing. And the overwhelming majority of people I have worked with feel the same way. If you ask them if they had the choice, would they prefer to do what they do at work tomorrow, or stay home and do something else they enjoy doing, like go fishing, etc? Virtually none select the former. There is a reason why most people retire at their first opportunity. For most people the working world just sucks.

    Yes, more people have college educations but are they able to use that education to do things that give them any intrinsic reward? How many of those people have earned degrees in areas that could provide then with intrinsic reward, including very technical ones like astronomy, but find they are worth little more than bupkis in the working world. What has their degree given them? And how shocking is this to them when they find out, after the time and money have been spent, that they have been taken for an idealistic ride on their dime. But they still have to pay the bills.

    Why is it the best and the brightest with educations that might solve health or climate or … issues end up in financial services other than solving their personal finance issues to pay the bills?

  • Report this Comment On November 29, 2013, at 7:42 PM, WDC1 wrote:

    TMF--are you serious? This era should be called "By A Thread". There is nothing to crow about or depend on.

    I'm 66 and a life-long saver. I went to college when

    virtually anyone could figure out how to financially limp along.

    I truly feel bad for this new generation. A mountain of debt after graduation. And then few meaningful

    work opportunities. Politics of hate and a refusal govern. Forget half empty or full. Where's the glass?

  • Report this Comment On November 29, 2013, at 7:59 PM, wishdom wrote:

    Your perspective abounds with joy and appreciation of the USA. Your statement about those living in poverty (however that is defined lately) shows the safety net that mostly works most of the time. I had a friend some time ago say, "We can't buy what we want, we can only buy what we need." They had a home, 3 nice cars, 2 very good jobs and kids doing well. That is the cry of some postings here. I have a friend whose favorite saying is "If money is your only problem, you don't have a problem." 98% true. I'd venture to say that EVERYBODY that posts comments in MF has enough and is above the poverty line. Thanks for the thankful contribution.

  • Report this Comment On November 29, 2013, at 8:11 PM, tedwarrenlives wrote:

    Do you know how much money has been lost due to the 401K money being funneled away.

    Do you know large of a mistake the last 10 Congress and 6 Presidents turned over our retirement and pensions to be watched over by the wolves of Wall St., ironic.

    Stop masking the truth with nonsense.

  • Report this Comment On November 29, 2013, at 8:19 PM, enginear wrote:

    Great article (again!) Morgan.

    The complaining about waiting 8 seconds for a network to bring up a page on a smartphone sometimes flabbergasts me when you think that we would have had to go to a library and hope we could dig up the information just a few years ago.

    I even do it myself sometimes. We need thanksgiving more often I guess (and to really think about it).

  • Report this Comment On November 29, 2013, at 8:20 PM, tallman68 wrote:

    Be interesting to see median (individual) income instead of household. I'm curious how much "growth" is due to 2 income households working for the same or a little more than their parents earned with one breadwinner.

  • Report this Comment On November 29, 2013, at 9:14 PM, sciencedave wrote:

    Nice article. The comments show how controversial a subject this is. The comments also show how people interpret numbers the way they want to....with their perceptions not with reality. I work with lots of people making well over 100k a year and living paycheck to paycheck while some with the same obligations make do with less than half that....get real!

  • Report this Comment On November 29, 2013, at 9:50 PM, szcz wrote:

    I would bet the ranch money that the author of this article is just another big government leftist at the FOOL (there are so many!).

    Government control over our lives has never been greater. The IRS now targets groups that it doesn't like. How many people have lost their health insurance and how many more will? Taxation (federal, state, local, sales tax, real estate property tax etc.) has never been higher. Also, rates may have been higher in the past but so were deductions. The NSA monitors emails and phone calls of American citizens.

    Certainly there are more college graduates now than during the civil war but trying reading a letter written during that war by someone with an eighth grade education and compare it to anything written by most college graduates today.

    If you are a socialist in America today, this is the best of times. If you are someone in America who has read the Constitution and the Federalists Papers, this is the worst of times.

  • Report this Comment On November 29, 2013, at 9:56 PM, Wildflyer wrote:

    Provocative article,Morgan,but it leaves many loose ends.

    Why aren't Americans happier than they were fifty or one hundred years ago?

    Why shouldn't a Dow of 16,000 make our economy "happy"?

    Many factors serve to thwart that optimism that oozes from your article like fresh roadkill.Ask a Walmart worker about getting by.

    Consider the adverse changes in literacy rates,income and healthcare disparity,obesity,population explosion and their potential to impart misery,no matter what the economy, or a person's household income,is doing.

    Improvements in wages, life expectancy, the work week, or even the Dow can hardly serve as reliable measures of improvement in that human condition of unhappiness.It is more complicated than that.

    Our persistent enslavement to technology,failure to plan for the future,and erosion of individual accountability are just a few things that may account for America's gloom.

    Many years in medical practice has convinced me that America (and its economy) is on that bus with Ray Charles at the wheel.

    The consumer had better get up there and drive himself.

  • Report this Comment On November 29, 2013, at 10:11 PM, KongPL wrote:

    As non American, I am amazes how almost all of the right wing commenters on these pages lack any meaningful argument.

    Great article, Morgan!

  • Report this Comment On November 29, 2013, at 11:11 PM, pvellozo wrote:

    Great article. I am exceedingly fortunate. Some of the comments here ooze negativity.

  • Report this Comment On November 29, 2013, at 11:43 PM, canucknobuck wrote:

    Typically brilliant article Morgan. Thank you. I also believe the best is yet to come - we are living in an age of technological revolution - not just the Information Age but the Connection Age. This in combination with mobile computing and ubiquitous internet will continue to change everything - socially, culturally, and economically. I believe the US economy is poised for a great renaissance - demographic factors, oil independence, technological superiority in so many areas, the best most compelling brands on earth and the best capital markets anywhere. Of course there will be blips but step back and look at the larger forces at play and always, always think for yourself - the job of the talking heads is to fill air with noise. That's why I always enjoy your articles Morgan - perspective and insight. I hope The Motley Fool realizes what a great asset they have in you. Thank you.

  • Report this Comment On November 30, 2013, at 12:39 AM, john795806 wrote:

    Let me go against the grain here.

    One reason why things keep getting better is precisely our pessimism and discontent, which is human nature. We always want things to get better, As long as humans have problems, we'll be living with a measure of discontent.

    Put another way, if we were NOT discontent with our cell phone or our health care system, would they be getting better? I think not!

    That said--this is Thanksgiving, my favorite holiday of the year, and time to put our grumblings aside and look at the big picture. Most of us have a life we can enjoy, if we would bother to do so!

  • Report this Comment On November 30, 2013, at 1:16 AM, awallejr wrote:

    Except John795806 MOST in the WORLD don't. It would be a con job and nothing more if someone argued otherwise. MOST just try to survive. MOST are hoping to just get food on a regular basis.

    There is what I call THE GREAT CON. It is comparable to, I hate to say this so someone doesn't call the Godwin rule, but, what Hitler used as THE GREAT LIE. Just make it and people will fall for it.

    It is a con because maybe in Morgan's world things aren't ugly. But in the world of the masses things are otherwise. Yay he wants to cheer those FEW who manage to make millions, but ignore the fact that millions had to suffer otherwise.

    Ever watch the History channels' series on the men who made America? Carnegie, Morgan, Rockerfeller, Vanderbilt. Great series. It showed how a handful controlled the lives of the masses. Didn't matter how many people DIED in those steel mills or building those railroad tracks. Let's cheer the handful that amassed massive wealth on the backs of others.

    Only suckers fall for these "puff pom pom" pieces. Yay how lucky we are.

  • Report this Comment On November 30, 2013, at 1:17 AM, sliderw wrote:

    Americans are not happy that real household income has not kept up with inflation. Most of the income growth over the last few decades has gone to the very rich, not spread around more fairly.

  • Report this Comment On November 30, 2013, at 1:18 AM, sliderw wrote:

    By "real" I don't mean after-inflation I mean disposable. Sorry for any confusion.

  • Report this Comment On November 30, 2013, at 1:27 AM, Gyre07 wrote:

    I don't think the low mental quality of life in America has anything to do with an abundance of material things. I think we have: a crappy consumer culture, a government that doesn't give a damn about representing the citizens, a government which is spying on us (implying that we're all suspected of something), middle-class decay, more likely an actual 20% unemployment rate, and a geometrically-declining public school system. And there is so much more to indicate that America has abandoned it's guiding principals. All of which contribute to the sense of unease infecting Americans.

  • Report this Comment On November 30, 2013, at 1:29 AM, Pjstew wrote:

    cmalek wrote " Sugar went from 59 cents for 5 pounds to $2.99 for 4 pounds. I was paying 26 cents for a galon of gasoline in December of 1972. Now I pay $3.69. A CARTON of cigarettes was in the $2 range. Now one PACK is over $10."

    Just think if you had cut out sugar and cigarettes, how much you could have saved, not only in money but for your health.

  • Report this Comment On November 30, 2013, at 3:08 AM, fufupame wrote:

    Morgan, thank you. You are right! Most things are better than before. More people are better off today than ever before. I always suspected what you wrote about. I retired when I was 52. Food, housing and everything else seems cheaper than I remember from the '60s and all in all, I think that the US is doing surprisingly well. But being humans, we all think that we were better off before. Human nature makes us forget the past. Thanks again. Sometimes we need a dose of reality to understand our lives better.

  • Report this Comment On November 30, 2013, at 4:22 AM, hajiyoyo wrote:

    While material comforts certainly contribute to quality of life and hence, happiness, it is not a reliable metric. I am fortunate to have a great job that enables me to travel to many places outside of the great USA. I have visited many cultures that are immersed in what we would consider abject poverty. Yet many of these people are much "happier" than the typical American, that is addicted to technology and instant gratification. Quality of life and happiness is best measured by the quality of our relationships. Bhutan is a very poor country, yet it is considered to have the happiest, most content people on the planet. Each of us wakes up each day and chooses whether we will be happy. Many of the negative commentors seem to have "victim" attitudes.

    A similar theme is that most people's perception is that the world is extremely violent. However, by all statistical measures, this is the most peaceful time in human history (per capita). We are brainwashed by media.

  • Report this Comment On November 30, 2013, at 5:11 AM, mrskew wrote:

    All this back and fourth has made me pull out Henry David Thoreau's "Walden" for another read...

  • Report this Comment On November 30, 2013, at 7:12 AM, Mathman6577 wrote:

    Walden Pond is one of my favorite places :)

  • Report this Comment On November 30, 2013, at 7:25 AM, daveandrae wrote:

    ^

    I got through 2/3's of Walden before I finally put it back on my book shelf. Cormac McCarthy's Blood Meridian or Ralph Ellison's Invisible Man is far more entertaining.

    After we left all hell broke loose at my girlfriend's Father's house Thursday afternoon. He asked his other daughter why she was acting like such a female dog, she countered, they argued, then he kicked his entire family out of his house. Grandchildren and all. Said he won't ever host another family gathering. Yesterday, i found out my portfolio returned 31.38% over the last twelve months.

    Everything is amazing and nobody is happy.

    Amen.

  • Report this Comment On November 30, 2013, at 8:19 AM, will1946 wrote:

    You are so right. Nearly everything is better and easier (not necessarily a good thing in itself). I think many people are so insular they have little idea of anything around them except what is expected of them in the next instant. Living with blinders on. And when the shadow of death comes -- what an unfair surprise!

  • Report this Comment On November 30, 2013, at 10:39 AM, devoish wrote:

    "If I say the average family earns less today than it did in 2000, it sounds depressing. If I say the average family earns more today than it did in 1995, you get a much different view." - Morgan Housel

    "The median income of US households in 2011 dropped to its lowest level since 1995, highlighting the income pressure on Americans on middle to lower steps of the economic pyramid." - Finfacts from the Financial Times

    It would also be nice if the "median" income of 2011 was able to fund its retirement by buying shares of an SPY fund for the $50/ share 1995 price instead of 2011's $180. and gasoline for $1.50 instead of $3.35.

    The average college graduate in 1993 had incurred $8,462 in student debt. In 2004, this had risen to $13,275 according to PIRG.. Today it is $25,000 according to CNN.

    And yet, incomes are the same as 20 years ago so all is well. I guess that when a few of us are getting so far ahead, it can be hard to see most of us are falling behind trying to fund investment income.

    You said something about blinders...

    Best wishes,

    Steven

  • Report this Comment On November 30, 2013, at 11:04 AM, Architect27 wrote:

    If one manages to invest wisely then at the end of your day after coming home from your "9 to 5" "the market" may have made more in (tax deferred?) income than one's "9 to 5" and, for the most part, one did not have to invest more than an hour setting up trades or adjusting / balancing existing trades. Then, add a sprinkling of compound interest to the equation.

    A co-worker who professes to live paycheck to paycheck needs to invest more than most, but will not read anything to see the opportunity he can have to make additional income in the market without having to have a part-time job. He does have to scrape up an initial investment amount and that is not always easy but it can be dome if the will is there.

    I have passed along Gardner's "the 13 Steps..." and a few SA newsletters and so far, excuses as to not having the time to read, now going on three weeks. Also, my many offers to increase his financial vocabulary are politely passed up.

    With today's technology and digital mobility it is possible to do something. It is possible for many others too, so the technology does not necessarily give one an advantage as the masses are gaining the same capabilities. The one thing tat cannot be passed up is TIME. On many scorecards shown here on TMF, the best returns indicated average 4 or 5 years from starting date.

    My coworker is 20 years younger than me, and in that twenty years, is time to make something happen.

  • Report this Comment On November 30, 2013, at 11:05 AM, golfnut163 wrote:

    Great article and very easy to understand! It definitely puts things in perspective!

  • Report this Comment On November 30, 2013, at 11:11 AM, Ravenor wrote:

    @awallejr

    1. What are you doing to ameliorate the current set of problems we face as a country?

    2. I will not dispute the labor practices, but what did those titans do when they were finished making their massive gains?

    This: John D. Rockefeller gave away US$540 million over his lifetime (in dollar terms of that time), and became the greatest lay benefactor of medicine in history.[23] His son, "Junior," also gave away over $537 million over his lifetime, bringing the total philanthropy of just two generations of the family to over $1 billion from 1860 to 1960.[24] Added to this, the New York Times declared in a report in November, 2006 that David Rockefeller's total charitable benefactions amount to about $900 million over his lifetime.[25]

    Carnegie: Carnegie funded some 3,000 libraries, located in 47 US states, and also in Canada, the United Kingdom, what is now the Republic of Ireland, Australia, New Zealand, the West Indies, and Fiji. He also donated £50,000 to help set up the University of Birmingham in 1899. And more.

    Buffet and Gates etc.: Giving it back in ways we may not begin to imagine

    Me: IF I ever get there, I am going to clean up the gyres in the the ocean and attempt to infuse more vigor for science and economics into the American education system.

    Morgan, keep up the optimism! Those of us who want change will bring it about.

  • Report this Comment On November 30, 2013, at 12:32 PM, dividend123 wrote:

    I enjoy this article. One thing for certain is that many things that some people worry about they can live without and are not "needs". Two cars are hardly necessary . If you are not super rich you don't need a boat, it is nice have but you don't need it. You don't need cigarette. If you are a family of 5 you don't need a 5000 square feet house. Once separate "needs from wants", we are on our way to make life better. Contentment does not means you are lacking ambition.Look at Warren Buffet he don't flash his riches, does he?

  • Report this Comment On November 30, 2013, at 1:08 PM, kyleleeh wrote:

    @devoish

    The chart is clearly labeled as "real" median income. Inflation has already been factored in when comparing 1995 income to 2012.

  • Report this Comment On November 30, 2013, at 1:19 PM, boogerface02211 wrote:

    Morgan, you still da man.

  • Report this Comment On November 30, 2013, at 1:28 PM, pa13 wrote:

    Dear Mr Housel,

    I love your articles and and am thankful I have the internet to read them from England. It helps me keep in touch with USA. We lived in Washington DC for 3 years, leaving in 1956 when I was a first-grader. I can't remember life in England before that, but my parents felt very well-off in USA (for the first time since 1939), having a TV, a car, able to travel widely if they combined business trips with camping holidays, and eating steak, and chicken (which was expensive in UK as not yet factory-farmed). I look forward to reading more of your articles - it's not just the historical insights I enjoy. Thank you.

  • Report this Comment On November 30, 2013, at 1:47 PM, awallejr wrote:

    @Ravenor

    Yeah I guess all those people getting seriously hurt or killed at work back during those "glory" years were grateful. At least now we have OSHA. But wait many shout too much regulation.

    I am sure all those people back during those "glory" years working 12 hours a day in sweatshop conditions were grateful. At least now we have NLRB. But wait many cry about the increased labor costs.

    And let's not forget removing that impediment to Wall Street's greed by repealing Glass-Steagall. Thank you Larry Summers.

    I am also sure all those survivors from the Johnstown Flood cheered Carnegie for his subsequent generosity to charities.

    Please do not equate technological/scientific/economic advancements as a panacea for defining "how lucky we are." It is a sucker's game.

    The "Club" wants you to keep thinking that way while they keep accumulating the world's assets.

    While I submit that all that matters in the end is the quality of one's soul since everything else is transitory, that doesn't mean ignore and accept the harsh realities of life.

    Had Morgan written saying let's be grateful for the good things we do have, that would have been enough by me. But this article went beyond that, being nothing but a shallow "pom pom" piece.

  • Report this Comment On November 30, 2013, at 1:55 PM, awallejr wrote:

    And to follow up. At my age 2 of the "good" things I am grateful for is the modern bathroom and Metamucil.

  • Report this Comment On November 30, 2013, at 6:23 PM, Zombie111 wrote:

    Bad news sells. It sells the media and it creates anxiety which can be soothed, temporarily, by buying things.

  • Report this Comment On November 30, 2013, at 8:31 PM, Mbanes41 wrote:

    Positive article....but some unrealistic points. For example...man cannot live forever. At 150 years old how useful is a person? Think about it - if we continue to work towards extending people's lives beyond reason the entire system will break down. Less useful people who need more care and can contribute nothing in return. Natural selection has it's place. Remove that from this article first.

    Next is income - while North American's incomes may be the best in the world it seems as if everything with the exception of the air we breath now has a price tag. So the more we make, the more we are forced to spend. Are we really better off? More money in, more money out is a zero gain way of living.

    If people are "just getting by" they have reasons to be unhappy...and if we keep the unhappy people around until they are 150 years old or more...wow.

    Just saying...

  • Report this Comment On November 30, 2013, at 10:06 PM, devoish wrote:

    kyleleeh,

    Thank you, I totally mis-read the chart.

    And yet economic opportunity feels worse today than in 1995.

    "If I say the average family earns less today than it did in 2000, it sounds depressing. If I say the average family earns more today than it did in 1995, you get a much different view". -Morgan Housel

    But If you say the average family earns less today than it did in 1989, it would sound depressing and be true too.

    I guess it is just depressing for half of America to know that they have made zero progress toward better financial outcomes in 22 years, despite technological marvel and the consumption of significant amounts of effort and natural resources.

    Especially after the significant gains that were made before then. Real median income in 1967 was $42,000. Twenty-two years later in 1989 it was $51,681, twenty-two years later in 2011 it was $51,100.

    Best wishes,

    Steven

  • Report this Comment On November 30, 2013, at 11:30 PM, SkepikI wrote:

    Well, from the commentary and the gratitude of some of your readers, it would seem optimism "sells"

    OR, as I prefer to think, "about half of everything is 90% mental" -Yogi Berra.

    This sort of essentially factual dross can be produced just about any decade of human history, with the exception of the dark ages. That it can be reliably said in nearly every decade of THIS countries history is more remarkable.

    There are scads of other facts you left out, presumably in the interests of brevity, like what would you have paid in 1970 for a computer that would fit in your hand and deliver useful computations as well as world wide access to communications and entertainment. OR the price of an "automatic typewriter" that corrected your spelling in 1969...

    Progress in new ideas and technology has been a reliable feature of our existence for Milena. As has been the escalation of stagnant commodities until they become obsolete. What would be the price of Whale Oil in real terms today compared to 1800- answer, negative because you would be fined for possessing it today ha.

    I suppose it is useful to buck up the depressed Morgan,and goodness knows, perspective is much needed in the investing world, but other than that, I don't see much practicality in it.

    Oh, I do have to admit your reminder:

    <Do you know what can happen in a decade? A little more than 10 years ago, AOL dominated the Internet, oil cost $13 a barrel, Fortune magazine named Enron one of America's "most admired corporations," and Apple was a joke. Everything can change, in other words.>

    got a chuckle and my attention. Anyone care to double down on APPL?

  • Report this Comment On December 01, 2013, at 12:45 AM, mapartha wrote:

    Happiness is a state of mind. Unfortunately, the governments and people of developed countries of the world think that achieving bodily comforts can bring happiness. As long as the basic needs of a person are met, the only thing that can bring happiness is spiritualism, and spiritualism is available almost for free. The irony is that, in search of happiness, humans are going after more and more materialism and becoming bonded labourers in the material world.

  • Report this Comment On December 01, 2013, at 2:00 AM, awallejr wrote:

    I am just reminded of the song by Frank Sinatra "I am going to live live live live live until I die."

  • Report this Comment On December 01, 2013, at 11:31 AM, ABlackDude wrote:

    "by most measures, most Americans live in a better, safer, more prosperous world today than they could have dreamed of a few decades ago"

    This statement is not true.

    "A few decades ago" the community I grew up in (south side, Chicago) was populated with people that earned sufficient income to purchase homes, send their kids to college and retire comfortably. Fast-forward to today, their often better educated children and grandchildren are far worse-off financially, under/unemployed can no longer afford to buy homes in the same communities which because of disinvestment, predatory banking and exclusion from economic opportunity are now plagued buy foreclosure, crime and general neglect. In spite of all the 'neat gadgets'Things are getting worse for 'people' ..

  • Report this Comment On December 01, 2013, at 11:37 AM, SharpN wrote:

    Financial abundance, technological innovation, and physical longevity can all, under appropriate circumstances, be conditions for which the person receiving them may be grateful. A good life, however, results from meaning and fulfillment—qualities which increased income, gadgets, or lifespan do not necessarily guarantee. If a life is devoid of true human intimacy and connection, if it lacks reflection and introspection, if it is without significance and purpose, then what value to that life of financial riches, technological marvels, and years of endless ennui? For such a life, less rather than more, simplicity rather than complexity, and connection rather than distraction would be the blessing. Thus, it is understandable that many Americans are unhappy and ungrateful even while surrounded by abundance.

  • Report this Comment On December 01, 2013, at 11:51 AM, TMFHousel wrote:

    <<This statement is not true. A few decades ago the community I grew up in (south side, Chicago) ...>>

    The nation is larger and more diverse than the south side of Chicago. You can't prove an average wrong with an anecdote.

  • Report this Comment On December 01, 2013, at 1:26 PM, awallejr wrote:

    Well Morgan, how about my using your own chart. In 1995 it has median income at $50,979 and in 2012 it has median income at $51,017. So after twelve years the median income went up a whopping 38 bucks. And that is BEFORE inflation is factored in.

    Now your 1 pct did a heck of a lot better as per that link of mine above.

  • Report this Comment On December 01, 2013, at 1:37 PM, TMFHousel wrote:

    <<And that is BEFORE inflation is factored in.>>

    No, that's with inflation.

  • Report this Comment On December 01, 2013, at 2:10 PM, SkepikI wrote:

    <<This statement is not true. A few decades ago the community I grew up in (south side, Chicago) ...>>

    Morgan, you were way to kind to the writer. Chicago has been controlled by crooked politics for over a century. I recall my grandfather commenting on it oh about 1957: "Buncha crooks run Chicago, nothing good ever comes out of there. YOU stay clear of Chicago" Seems good advice spans many decades when it comes to certain places, unable to detect their own folly. Of course, big city politics has infected a lot of other places, and its hard to get away from..... the results of over a century of tolerance though are obvious to some of us.

  • Report this Comment On December 01, 2013, at 4:02 PM, awallejr wrote:

    <<No, that's with inflation.>>

    And yet we are talking 38 bucks for 12 years while the top 1% gained a heck of a lot more.

  • Report this Comment On December 01, 2013, at 4:17 PM, tokelau wrote:

    VS = only country in the civilized world without decent health insurance for one and all. Someone tries to change that and all you can do is call him a fool.

    Weird people.

  • Report this Comment On December 02, 2013, at 4:17 AM, nivekluap wrote:

    I am MUCH better off now than I was 5, 10, whatever years ago because I started to read articles from the "Fool" in the local news paper. My son pointed to the Web. address and helped me get to the site....I'd purchased a computer and "hooked up" to the internet for my daughter. I've been reading articles here and elsewhere since that day.

    Why am I better off?

    10 percent into the 401K

    Max out every year to my Roth IRA

    Remind my spouse and children to spend less than what is brought in.

    Do something, as often as possible, for someone else...Open a door, smile and say Hi, help out a co-worker, etc.

    I decide, every day, to make it a good day, and then make the best of the time I have. We only get to die ONCE, but we get to live many days.

    Great article Morgan...have a great day!!

    KD

  • Report this Comment On December 02, 2013, at 12:27 PM, Megatron916 wrote:

    may i suggest an alternate title? "It is the best of times, It is the worst of times"

  • Report this Comment On December 02, 2013, at 3:24 PM, mhayon wrote:

    Great article, Morgan. There are always going to be optimists, there will always be pessimists. There will be people selling when you are buying, and buying when you are selling.

    When it comes to investing, however, history indicates that the optimists will win out (thanks to compounding and the strength of the US economy). Not to sound too much like Buffett, but this country has been through two world wars, a Great Depression, a couple of recessions in between, acts of terrorism, and on and on, but American business keeps marching on.

    I think we'll be OK.

    -- Matt

  • Report this Comment On December 03, 2013, at 10:53 AM, 48ozhalfgallons wrote:

    Everything is amazing and no one is happy, indeed.... because as we are dangling on this fragile economic and social thread so high above our demise we know what is about to be lost. It is impossible to enjoy a miraculous present while viewing a tragic future.

  • Report this Comment On December 03, 2013, at 11:07 AM, Gorm wrote:

    FACT is perception is reality and expectations set the tone.

    While budget components may have shifted, ie food down, energy up, the REALITY is Americans are mired in DEBT (past consumption and production) and disposable income is DOWN!!

    Dual incomes are a necessity more often than not. In a consumption based economy our jobs have shifted from higher paying manufacturing to lower paying service.

    Just how do you explain the increasing gap between haves and have nots?

    Why is finance (and the manipulation thereof) more highly rewarded than other endeavors? Why do schools see their best and brightest favor finance over engineering, medicine?

    Government has increasingly meddled in to MANAGE, to condition dependency and a societal decrease in self reliance is NEVER good for any economy where the doing NOTHING to working is perceived as economically advantageous increasingly responsible for

    Things have changed and not for the better, in many cases!

    Gorm

  • Report this Comment On December 03, 2013, at 11:27 AM, 48ozhalfgallons wrote:

    @ mapsrtha: "the only thing that can bring happiness is spiritualism, and spiritualism is available almost for free" Hmmm.... almost for free.

    That's interesting. Spiritualism in groups (churches) yields a collective guilty conscience. There is a price to pay for spiritualism. Is collective spiritualism no more than fire insurance?

  • Report this Comment On December 03, 2013, at 11:40 AM, duuude1 wrote:

    Gorm - in some ways your comments make a little sense. So when you say:

    "...perception is reality and expectations set the tone"

    you are re-phrasing a classic advertising mantra where the spin-meisters know that they can hypnotize most people (all of us here - no one here is an exception) with hype. So in one way that is a highly cynical observation of humans and their manipulability.

    At the same time you are summarizing the thesis of behavioral economists like Robert Shiller, who I admire tremendously, who propose perceptions and expectations as reasons why we see such nutty bubbles like the 2001 internet bubble and the 2006 housing bubble. We all contributed to those bubbles in our own ways. So the advertising execs and Nobel prize-winning economists agree on one unfortunate point - we're all a bunch of pathetic suckers.

    But it doesn't have to be that way!

    And that's where places like TMF can help - by convincing desperately unhappy folks like you (judging by the grammatically tortured unreadable last paragraph of your comment above) to ignore your perceptions and focus on facts - and keep investing in diversified stocks regardless of what you think and feel.

    It's kind of like what your folks always said when you were a kid:

    - no matter how much you WANT the cookies, control yourself and say no

    - no matter how much you DON'T want the broccoli, control yourself and eat the damn stuff

    Exercise even if you don't want to. Avoid binging on alcohol even if you want to.

    Invest even if you don't want to. Avoid spending on X even if you want to.

    Life is good even if you don't think it is. Pessimism is a dead end even if it feels good to vent.

    Duuude1

  • Report this Comment On December 03, 2013, at 12:53 PM, hbofbyu wrote:

    @mhayon

    What keeps American business marching on?

    Since we have succeeded in the past we will undoubtedly succeed in the future?

    There are things to worry about:

    International test scores among 15 year olds

    - In math, Shanghai, China; Singapore, Hong Kong South Korea and Taiwan topped the list. The U.S. placed 30th on the list.

    - In science, Shanghai, China was again at the top, followed by Finland, Hong Kong, Singapore and Japan. The U.S. was 20th on the list.

    - In reading, Shanghai, China again led the top five and the U.S. falls in at 17th place.

  • Report this Comment On December 03, 2013, at 6:34 PM, mhayon wrote:

    While I agree that past results isn't indicative of future success, I'll give you that, I think it's a bit short-sighted to write off America, especially in the short-term.

    While the above is unfortunate, and there may room for concern from international pressures, all I am saying is that we have faced much graver issues in the past.

    While the mighty have and will fall, I am not denying that, I haven't really seen a convincing argument of our imminent downfall (and the 3 statistics you stated don't do that).

  • Report this Comment On December 03, 2013, at 6:35 PM, mhayon wrote:

    Sorr, aren't*.

  • Report this Comment On December 03, 2013, at 11:29 PM, DJDynamicNC wrote:

    "- In math, Shanghai, China; Singapore, Hong Kong South Korea and Taiwan topped the list. The U.S. placed 30th on the list.

    - In science, Shanghai, China was again at the top, followed by Finland, Hong Kong, Singapore and Japan. The U.S. was 20th on the list.

    - In reading, Shanghai, China again led the top five and the U.S. falls in at 17th place."

    It's crazy what investing in your educational system instead of in your military will do, isn't it?

  • Report this Comment On December 04, 2013, at 12:21 AM, DJDynamicNC wrote:

    "As long as the basic needs of a person are met, the only thing that can bring happiness is spiritualism, and spiritualism is available almost for free."

    Spiritualism has nothing to do with happiness. If anything, spiritualism has hindered happiness through the ages. The Crusades didn't "just happen", you know.

  • Report this Comment On December 04, 2013, at 10:17 AM, jlclayton wrote:

    I believe that the biggest reason a lot of people will always feel negative about their situation in life is because they refuse to really be honest about true wants and needs in life. When talking about disposable income, they think that income is only classified as disposable after they've bought everything they think they need, regardless of whether it's necessary or not.

    An example in my life is our cell phone bill. We went from having a $60 landline phone to every family member having a smartphone and a bill over $300 each month. That is a luxury and both my husband and I understand that a choice like this is a want, we don't need smartphones.

    We also refinanced our home to a 15 year mortgage so that it would be paid off by the time we retire. In order to do this, we will not be taking expensive vacations, and we will continue to buy used cars and not new ones. We have friends(whose income is comparable to ours) who feel bad for us that we can't afford to go on their weeklong cruise with them every year and think it's crazy that we both drive vehicles that are 7+ years old. However, they already refinanced their home to another 30 year mortgage to tap into their equity and have major credit card bills. Considering that we'll all be hitting retirement at about the same time, I think that our understanding of wants vs. needs will definitely have us in a better financial position to enjoy our retirement or weather a financial crisis.

  • Report this Comment On December 04, 2013, at 11:11 AM, 48ozhalfgallons wrote:

    When an owner enters his or her paid off house located in a good neighborhood, he breathes deeply and sleeps well. These houses are usually much smaller than the other kind.

  • Report this Comment On December 05, 2013, at 7:51 AM, KevinSS13 wrote:

    Here is a situation where Averages KILL any meaningful insight. You must look at segments of the population to see that things are not better for everyone - in fact for the vast majority of housholds things have gotten worse in many ways. The top 1% now has 40% of the wealth in this country - about double what they had 30 years ago (est...if I recall correctly). Perhaps the top 20% have seen real gains...but for the other 80% of households things have gotten generally harder --- for many it is much, much harder. Your AVERAGE will not show this disparity.

  • Report this Comment On December 05, 2013, at 8:02 AM, KevinSS13 wrote:

    Simple (extreme) example...You have 10 people, give 9 of them $1, give one of them $91. The average would say that everyone is $10 richer. Tell that to the 9! Same principle with the statistics used in many of these charts.

  • Report this Comment On December 05, 2013, at 10:46 AM, KevinSS13 wrote:

    One last word, because I sadly see analysis like this (relying largely on the average/mean or the median) leading to many of the polarized discussions in our society. So while Mr. Housel's mathematics may be correct, he misses the understanding that the average/mean can be highly skewed by the extreme performance of a small subset. Similarly, extreme performance by a small subset can be hidden when focusing on median (middle of a distribution set). This is a crucial concept many people (and politicians) miss, which leads them to talk past each other - whether it be on the topics of investments, portfolios, management, taxes, student performance, economics, etc. My advice: whenever someone starts talking about the "average" or the "median" ...ask yourself what information is being hidden with that term.

  • Report this Comment On December 05, 2013, at 11:09 AM, TMFHousel wrote:

    <<So while Mr. Housel's mathematics may be correct, he misses the understanding that the average/mean can be highly skewed by the extreme >>

    That's why I used median income, not mean.

  • Report this Comment On December 05, 2013, at 12:18 PM, duuude1 wrote:

    Median is a big improvement over mean, but since there is such a huge range, adding another dimension to the plots would be immensely informative.

    For example, for your first graph, can you stack a series of income distributions over time, emphasize the median so we have a reference to your current graph...

    For life expectancy, stack a series of life expectancy versus income distributions versus time again with the median marked for reference...

    And exactly the same for labor force participation over 65+ as for life expectancy.

    I'm not a stats geek, and I think the hard-core stats duuudes would do an ANOVA over a whole set of variables, and then plot the most interesting ones to show how three or more variables affect things like life expectancy and income.

    Any chance you could just do replot the three to add another dimension to your existing graphs Morgan?

    Duuude1

  • Report this Comment On December 05, 2013, at 10:03 PM, kyleleeh wrote:

    << for the vast majority of housholds things have gotten worse in many ways. The top 1% now has 40% of the wealth in this country - about double what they had 30 years ago >>

    If the nations wealth also doubles in that 30 year period then then the other 99% have not lost anything under that scenario. they've just stayed the same.

  • Report this Comment On December 05, 2013, at 10:12 PM, kyleleeh wrote:

    <<There are things to worry about:

    International test scores among 15 year olds>>

    I don't ever worry about this for one reason:

    Most of these "brilliant" students from countries with better educational systems then the US have no intention of staying there. they'll hop on the first H1B visa to the US they can get ahold of. This is why despite the test scores of our school system, the US remains the worlds innovator, while China just manufactures cheap junk that someone else invented.

  • Report this Comment On December 06, 2013, at 7:05 AM, duuude1 wrote:

    Hey kyleleeh,

    "they'll hop on the first H1B visa to the US"

    That dynamic is slowly but surely changing. Other countries are investing in their university systems, and gradually, international students are finding cheaper and equivalent quality programs outside of the US.

    So if we continue to *fail to invest* in our kids and our educational system from bottom to top - we will lose it all.

    Our founding fathers knew that education is the foundation for a strong republic, and many invested personal wealth into founding universities.

    We've lost all of that wisdom and most of us now look down on education as a waste.

    Duuude1

  • Report this Comment On December 06, 2013, at 10:16 AM, TFPhilosopher wrote:

    "Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things you only hoped for." ~ Epicurus

  • Report this Comment On December 06, 2013, at 1:52 PM, venturen wrote:

    the problem with using "averages" are that you catch the criminal bankers pulling in $5 million a year to rip off pensioners and municipalities while putting together fraudulent mortgages with the people making ZERO....the average is $2.5 million. Can you include the destructive FED money printing at $85 Billion a month to enrich crooked bankers as well? My neighbor who is a lawyer putting together fraud renewable projects just bought himself a new range rover along with his new mec wagon....so do all those billions pouring into renewables that produce power 20% of the time help the "average person when the rates go up? Sure if you are Warren Buffet you are happy that the government is guaranteeing all people that own stock guaranteed gains. The poor guy down the road hoping to buy a house and save money that isn't a con man....not so much so. Good for you that this historic fraud is working for you...but just like the last housing bubble it is a short term fix that will end VERY BADLY.

  • Report this Comment On December 06, 2013, at 1:56 PM, HurricaneJohnson wrote:

    I by nature am an optimist and I appreciate a listing of the things we should be thankful for. Most of us reading the weekly TMF news articles are probably better off than many of our brethren.

    But there is a macro view that should be addressed with an eye towards gloom & doom.

    1) Poverty rates are very high

    2) workforce participation is low - especially for women, minorities, and young people

    3) The number for those on government services is skyrocketing. yes yes yes, you can count Social Security as a government service that people "paid into", but there are still too few people supporting these services as compared to the ones who use the services.

    This has to change because the math just doesn't work....and hopefully the country will affect change before things become drastic.

  • Report this Comment On December 06, 2013, at 2:12 PM, kyleleeh wrote:

    @duuude1

    That's not what we're seeing happening at all. Ask anyone from India, and they will tell you how many people are chomping at the bit to come to the US, both before and after graduation. From the time the US issues it's yearly quota of H1b visas to the time they are all gone is less then 24 hours.

    A quote from Singapore's prime minister Lee Kuan Yew sums it up best:

    " China can tap into the creative potential of 1.2 billion minds to innovate and grow it's economy. But the US can tap into the creative potential of 7 billion minds to grow and innovate theirs."

  • Report this Comment On December 06, 2013, at 3:00 PM, cmalek wrote:

    Pjstew wrote:

    "Just think if you had cut out sugar and cigarettes, how much you could have saved, not only in money but for your health."

    Had I not owned a car and had I lived in a cardboard box and ate scraps I dug out of the garbage, I would be a stinking milionaire (literally and figuratively) by now, including the environment.

    I see you get your exercise by jumping to conclusions. Just because I happen to remember prices of certain items, does not mean that I indulge in their consumption. You obviously missed the point that while income went up 5 fold, expenses went up 8-10 fold, leaving people further in a hole than they were in 1972.

  • Report this Comment On December 06, 2013, at 3:03 PM, cmalek wrote:

    @fufupame:

    You're right. Being human we all have our delusion. Some of us even have delusion of doing better.

  • Report this Comment On December 06, 2013, at 3:29 PM, cmalek wrote:

    Lies, damned lies and statistics.

  • Report this Comment On December 06, 2013, at 5:00 PM, dwb21317 wrote:

    And I thought Pollyanna was just a board game or a story character.

    The economy that matters most is the economy of the individual. If the country is doing well, but I am not, then the economy is terrible. I am not sure you understand that well enough, so I propose an experiment:

    Quit your job. Stay out of your chosen field of employment for at least three years. Prepare to feel ostracised from your life, because most of your co-workers deep down think unemployment is infectious.

    Cut expenses but make sure you still have to spend more than you wish to so that your savings bleed away. Sell off your 401(k), penalties and all, to keep a roof over your head.

    Apply for unemployment insurance, so that when it ends you'll have two years extra being told that since you're not on unemployment, you no longer count towards unemployment. See if your creditors feel the same way.

    Spend 3 years telling your family they need to be patient, that you haven't given up, and learn to deal with the constant suggestions from them about how to be employed again, all of which you figured out in the first month.

    Go to numerous job interviews and be rejected for jobs you are perfect for because you are overeducated or, according to the twenty-somethings that run personnel, you are too old.

    Then rewrite the story and let's see if you come up with the same conclusion.

    I can understand where you're coming from. You are a young, award-winning and successful writer, likely with what you think is a bulletproof six-figure income. But you need to walk a mile in the shoes of the people who feel like they're doing worse,

    18 years of near-stagnant real incomes really is a failure, and telling people that a 0.07% increase in median family incomes over 18 years means happy days are here again is just ludicrous. If you had been told in 1995 that the 401(k) you were in would be guaranteed a 0.07% increase over 18 years, would you have invested in it?

    And please don't tell us to feel better because billions live on $2 a day. Those billions aren't your audience, and they don't have the fortune of being born in a country where you will spend more in gasoline taxes daily than they will earn.

    Comparing people who complain about our economy to those who live halfway around the world in dirt hovels and work to feed themselves day by day is an insensitive conceit, and typical of theorists with pens. I hope that, with experience, you can do better.

  • Report this Comment On December 07, 2013, at 11:26 AM, trailways wrote:

    YES GREAT IS 51 MILLION ON FOOSTAMPS THATS MORE THE POPULATION OF SPAIN

    51 % OF PEOPLE IN US ARE ON GOVT ASSISTANCE 49% ARE WORKING

    OBAMACARE IS COMING

    CAN YOU SAY HAVANA CUBA

    THE US IS NOW A BIG HAVANA CUBA AND GROWING

  • Report this Comment On December 07, 2013, at 12:55 PM, duuude1 wrote:

    Hey kyleeh,

    "Ask anyone from India, and they will tell you how many people are chomping at the bit to come to the US"

    And I work with many many very smart Indian grad students - so I know that dynamic very well. Still that's anecdotal info - which I don't trust even if it's my own experience.

    More broad evidence of declining US appeal to international skilled workers:

    http://www.nationaljournal.com/next-america/perspectives/whe...

    It's never ever good to rest on the past and on your laurels - as Intel's former CEO Andy Grove said: only the paranoid survive. It's best to always invest - and as we're talking here - in education.

    Duuude1

  • Report this Comment On December 07, 2013, at 1:12 PM, jrj90620 wrote:

    Most Democrats,I know,earn a significant % of their income,in the underground economy.I think,as long as Democrats,don't enforce their fascism and the underground economy(really free market),continues to grow,we will be OK.So,Dems are hypocrites.What's new?

  • Report this Comment On December 09, 2013, at 1:00 AM, kyleleeh wrote:

    @duuud1

    This is the first paragraph from the gallop poll being referenced in the article you cited:

    " About 13% of the world's adults -- or more than 640 million people -- say they would like to leave their country permanently. Roughly 150 million of them say they would like to move to the U.S. -- giving it the undisputed title as the world's most desired destination for potential migrants since Gallup started tracking these patterns in 2007."

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