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December 09, 2013



Why have you stopped publishing full RSS feeds?
It's a blight to have to break out to the web site from Feedly to read your blog

Tim Worstall

If our well-being depends upon the change in incomes rather than levels, then the same rate of GDP growth will give us the same level of well-being, regardless of the level of income.

And it should be possible to test this too. The information from the past few years might do it. The stnadard happiness surveys have been going on across Europe as some countries continue to grow and others shrink.....30 odd countries, 5 or 6 years of data....

Luis Enrique

is saying we care about rates of change the same thing as saying we have asymmetric reactions to changes in levels? i.e. feel having something taken away more sharply than having same thing given.

Also I wonder if relative price changes have an effect, which could be obscured by calculations of real income changes based on consumption baskets. So underneath that data saying real incomes have risen or fallen x% since 1980 or 2007, what we were able to afford more of when incomes rose (CDs, clothes from Primark) differs from what we are now less able to afford when real incomes have fallen (central heating, transportation) so what we've lost hurts more than what we gained because we lost and gained different things.


Well you can't realise your house price inflation without downsizing and compound interest when interest rates are negative and inflation is compounded too and a devaluation in the pound (now reversed?).

Food and energy inflation in double figures and how much do you need to be comfortable, as capital expended on living is a wasting asset.

And by definition three quarters of people are not in the top quartile. And if you were in the bottom quartile you would not own your house or ever have enough income to save.

Any loss of income is catastrophic and immediately impact on living standards.

Personal debt at 1.43 Trillion for the UK households.



"Poorer people are "bearing the brunt of a storm" during which average household debt has risen to £54,000 – nearly double what it was a decade ago, the report by the Centre for Social Justice thinktank warns."

"Pond said: "With falling real incomes and increasing costs of basic essentials, many – especially the most vulnerable – are sliding further into problem debt. The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services.""

While Mr Micawber is still comfortable, many are not. Given the inequality and extremes in wealth average statistics can hide a multitude of sins.

And GDP is not a useful measure.


"And GDP is not a useful measure."

^ this

Luis Enrique

"And GDP is not a useful measure."

^ not this

Citizen 470001000201

If our real disposable incomes have gone up so much, then why are we also at record levels of debt, both including and excluding mortgages? Why not record levels of saving?

And are pensions included in disposable income? If so, why?


Peter gets a 10% pay rise - very happy.
Paul gets a 9% pay rise and is furious as to why he has been discriminated against. If Peter had got an 8% rise, Paul would be very happy with his 9%. Judgements are based on relativities and perceived fairness rather than any absolutes.

Politicians remain loath to tell the truth that good paying jobs are to be relatively scarce in the future as computerisation, world-wide competition and outsourcing continue. Investment in future UK growth is near zero. Rising debt, high rents and the Nation's vast capital lying dead within housing stock, consume the little that might have been available to spark any rebalancing of the economy towards a sustainable model. Most households are running on empty and sense there may be no way out.

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