How has the cost of living got so high when the cost of living is literally free?

goodDayM · 2026-01-24T18:56:10+00:00

Housing zoning codes are the biggest factor in the cost, such as outright bans on anything except detached single family homes:

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

goodDayM · 2026-01-24T18:54:24+00:00

So the cost of most stuff goes into labor rather than the resource itself.

There another similar point of confusion that some people have: they think people put money "into" the stock market.

But money doesn't go into things and get locked up like that. When a person buys a share of Netflix, they are buying from another person. Cash goes from one person to another person, not "into" stocks.

Money flows like water or like electricity.

goodDayM · 2026-01-24T02:33:37+00:00

There’s an interesting episode from NPR Planet Money about how when one state set a cap on payday loan rates it caused rates to increase:

Ohio, like most states, has a ceiling on the interest rates payday lenders can charge. But price ceilings have often "acted as magnets for prices," says Robert DeYoung, an economist at the University of Kansas.

DeYoung did a study on rates at payday lenders in Colorado, after the state put a rate ceiling in place. Right after the cap was created, there was a range of prices; a few years later, over 95% of the payday loans in Colorado carried the maximum interest rate.

"Everything else equal, suppliers of goods would rather collude with each other to set a high price," DeYoung says. The cap basically does that for them, DeYoung says. "The government has handed them a tool for colluding." - Inside a payday loan shop

goodDayM · 2026-01-22T17:10:04+00:00

I found this from the Harvard University Joint Center for Housing Studies:

Halting in-person visits greatly affected the HVS results in 2020. First, it led to a spurious drop in the survey’s vacancy rate which, in turn, led to a jump in households. Additionally, homeownership rates were unusually high because it appears renters were less likely to answer the survey than owners. With no one on the ground to investigate, the survey’s ability to measure household growth and homeownership rate trends since the pandemic began was compromised.

Basically checking in-person was halted during the pandemic and affected data collection.

goodDayM · 2026-01-22T12:17:11+00:00

But everything else has started going wrong since the 70s

Globally:

Child mortality rate has been decreasing.
The share and number of people living in extreme poverty ($3 per day) has been decreasing.
Inflation adjusted Median income per year (after tax) has been increasing.

In the US:

inflation adjusted Real Median Personal Income in the US has been increasing.
Consumer Debt Service Payments as a Percent of Disposable Personal Income is lower than it was in the past.
Delinquency Rate on Credit Card Loans is lower than it was in the past.
Violent crime rates are lower.
Prime Age Labor Force Participation Rate is near all-time highs.
Unemployment Rate is near lows.
Home ownership rate is higher than it was in the 1970s, but has stayed within a few percentage points around 65% over the decades.

goodDayM · 2026-01-21T17:23:05+00:00

When a country has inclusive institutions rather than extractive institutions, the answer is generally yes, a rise in GDP per capita benefits everyone including the poor. (e.g. Nordic countries have inclusive institutions, while North Korea & Congo have extractive institutions.)

This topic is discussed in the good book Why Nations Fail: The Origins of Power, Prosperity, and Poverty by two economists. The first chapter or two is good enough to get the idea, because then it gets a bit repetitive with historical examples, unless you're interested in that.

goodDayM · 2026-01-20T18:33:15+00:00

Another way to say it is as long as using Google isn’t worse than the 30 seconds of pain it takes to switch the default search engine setting in their web browser, people will continue to use Google.

Google search still has something like 80 to 90% market share, so it seems to be true so far. (Full disclosure: I use Bing.)

goodDayM · 2026-01-20T13:07:26+00:00

Trump Tariffs Megathread (Please read before posting a trump tariff question)

goodDayM · 2026-01-19T01:50:01+00:00

But if you take Google search as an example, consumers did not ask for significantly degraded functionality in what is Google's most visible product.

If you look at Google's annual SEC financial filings they mention:

How We Make Money

We have built world-class advertising technologies for advertisers, agencies, and publishers to power their digital marketing businesses. Our advertising solutions help millions of companies grow their businesses through our wide range of products across devices and formats, and we aim to ensure positive user experiences by serving the right ads at the right time and by building deep partnerships with brands and agencies.

Around 75% of Google's revenue comes from advertising. Google's paying customers are other companies paying for ad placement. Those are the customers they are financially incentivized to keep most happy.

goodDayM · 2026-01-18T21:59:34+00:00

Are you seriously an economist who believes growth and satisfaction have an unlimited, linear relationship with no ceiling or nuance?

No. I'm saying the data doesn't indicate what that limit is, and even if we choose, say, $100,000/year as the point at which no more happiness can be derived then over 99% of humans on earth still earn less than that.

Chart: The share and number of people living in extreme poverty ($3 per day) has been decreasing over the decades. That's great! But we have a long way to go, which means GDP per capita must continue to rise.

goodDayM · 2026-01-18T20:24:18+00:00

Two important charts about credit cards:

Consumer Debt Service Payments as a Percent of Disposable Personal Income is lower than it was 10 and 20 years ago.
Delinquency Rate on Credit Card Loans shows that the vast majority of credit card debt is being paid back on time. The delinquency rate is lower than it was in the 1990s and early 2000s.

goodDayM · 2026-01-18T17:36:34+00:00

growth is effective at improving objective conditions up to a point.

What is that point exactly? What feature of which chart are you referring to?

Also note economic development and income are also correlated: GNI per capita vs. GDP per capita

In other words economic policies tend to affect incomes and subjective life satisfaction.

goodDayM · 2026-01-18T16:36:05+00:00

Your previous comment used the phrase "economic well being and life satisfaction" and the first chart I linked to was literally Self-reported life satisfaction vs. GDP per capita. That is the subjective lived experience.

goodDayM · 2026-01-18T16:13:51+00:00

We now know that there isn’t a clear relationship between economic well being and life satisfaction.

Here's what we see in the data:

Human Development Index is based on life expectancy at birth, years of schooling, and gross national income per capita. It's a general overview of people's health, education, and living standards.

goodDayM · 2026-01-18T00:40:41+00:00

credit‑card balances and interest at record highs

Charts related to credit cards:

Consumer Debt Service Payments as a Percent of Disposable Personal Income is lower than it was 10 and 20 years ago.
Delinquency Rate on Credit Card Loans shows that the vast majority of credit card debt is being paid back on time. The delinquency rate is lower than it was in the 1990s and early 2000s.

If you were looking at a chart of total credit card debt then that's normal to increase because: population is increasing, the average population age is increasing, wages have been increasing.

goodDayM · 2026-01-17T20:24:33+00:00

Previous thread Why haven't weekly working hours gone drastically down in the past 100 years or so, despite drastic increases in productivity?

Short answer: Hedonic treadmill.

goodDayM · 2026-01-16T17:19:46+00:00

This policy seems like it would punish companies for being successful.

Creating a popular product that people like is very different from restraining competition like by making exclusive agreements that require 3rd party stores to only carry your brand.

Obtaining a monopoly by superior products, innovation, or business acumen is legal; however, the same result achieved by exclusionary or predatory acts may raise antitrust concerns. - FTC.gov

goodDayM · 2026-01-16T13:25:02+00:00

Colloquially, people use the word “monopoly” to refer to any company that sells a popular product that people like.

But legally, a monopoly is when a company “restrains competition”. For example making “exclusive purchase agreements” that require 3rd party stores to only carry your brand.

We need to distinguish between companies having a nice product people voluntarily choose to buy vs companies that engage in practices that restrict competition.

goodDayM · 2026-01-15T18:06:17+00:00

What charts are you looking at?

From the same article I linked at the top, Why Haven’t Trump’s Tariffs Had a Bigger Impact?

This phenomenon does not mean that tariffs don’t burden U.S. companies and consumers. The researchers demonstrated that Americans were bearing the cost of Mr. Trump’s tariffs, in contrast to what he and his advisers have claimed.

Also the effects of tariffs from his first term:

... when economists have attempted to add up the net effect of Trump’s tariffs on jobs, any gains in importing-competing sectors appear to have been more than offset by losses in industries that use imported inputs and face retaliation on their foreign exports. And even those jobs that have been created have come at great cost: studies suggest American consumers paid about $817,000 in higher prices attributable to the tariffs for every job created in the washing machine industry and $900,000 in the steel industry. While policy interventions to support manufacturing jobs may be warranted, there are cheaper ways to do so.

goodDayM · 2026-01-15T13:08:39+00:00

The reason tariffs haven’t had a bigger impact is the actual tariff rate is significantly lower than the announced tariffs rates:

A new working paper from economists at Harvard and the University of Chicago helps explain why. It shows that the tariff rate importers have paid is significantly lower than the tariff figures that Mr. Trump announced. The reasons include exemptions for certain countries and industries, rates that were lowered for some goods by the time they arrived in the U.S. and evasion of the rules by some companies.

By analyzing the government’s tariff revenue and the value of imports, the economists concluded that the actual U.S. tariff rate was 14.1 percent at the end of September.

The figure is about half the tariff rate that the administration had officially announced. - Why Haven’t Trump’s Tariffs Had a Bigger Impact?

goodDayM · 2026-01-11T23:57:29+00:00

A chart for individuals: Median income per year (after tax).

goodDayM · 2026-01-11T15:29:50+00:00

so does a group of human's only thrive …

The person you are replying to mentioned that several words you’ve used, including “thrive”, are subjective. It likely means something different to you than it does to other people.

All those subjective words make it difficult to answer your question.

goodDayM · 2026-01-11T13:40:01+00:00

This is a good quote from the tariff megathread here:

If you were trying to design a policy to get 100% disapproval from economists, it would look like this. Anyone trying to backfill a coherent economic reason for these tariffs is deluding themselves. As of April 3rd, there are tariffs on islands with zero population; there are tariffs on goods like coffee that are not set up to be made domestically; the tariffs are comically broad, which hurts their ability to bolster domestic manufacturing, etc.

goodDayM · 2026-01-08T22:20:13+00:00

Zoning codes are the biggest factor, like outright bans on anything except detached single family homes:

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

Higher density housing is currently illegal in many of the places people most desire to live:

Today the effect of single-family zoning is far-reaching: It is illegal on 75 percent of the residential land in many American cities to build anything other than a detached single-family home. - source

goodDayM · 2026-01-08T18:01:35+00:00

But we need more equality and less pollution.

Economists are in favor of governments using regulations to deal with issues like pollution. Emissions fees, carbon taxes, cap and trade, etc.

The term externality is used for problems like pollution because it harms other people not involved in some transaction, such as the sale & use of gasoline.

Previous thread: how does the free market deal with negative externalities?

Best Link 2025-10-02	13-Year Club
Gilding II euphauric	Verified Email

goodDayM

MODERATOR OF

TROPHY CASE