Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts

of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org

where you can subscribe, find other episodes, comment on this podcast, and find links to

another information related to today's conversation. Our email address is mailadicontalk.org. We'd

love to hear from you. My guest today is Thomas Sol, the Rose and Milton Friedman Senior Fellow at

Stanford University's Hoover Institution. He's the author of numerous books, including basic

economics, knowledge and decisions, and a conflict of visions. His latest book and our topic for

today is Economic Facts and Fallacies. Dr. Sol, welcome to Econ Talk. Thank you. Now your latest book,

Economic Facts and Fallacies is full of interesting data and arguments. Refuting some of the most

common fallacies we hear all too often. I'd like to talk about a few of them today. The first is the

area of what is called income distribution or standard of living in a more benign description. A lot

of people believe that the standard of living of the average American is no higher than it was,

say, 35 years ago. True or false? False. Why? Well, if we look just at the consumption figures,

that's the easiest way that the consumption is going up by a very substantial amount over the whole

period. I don't know how you can say that the standard of living is the same as the consumption is

gone up. There are a lot of reasons why people are able to claim that standard of living hasn't

gone up. One of the most common is that they use statistics on household income. And the problem

with that is that households have been declining in size over time. Households also differ from one

group to another from one income bracket to another and so on. Personally, I'm just, I find it

maddening that people insist on that on using household statistics. When a household

to mean very different numbers of people, whereas individual income always means one person's income.

And for example, over a period of about 30 years, the average household income in the United

...