How we spend our income changes over time. N.C. State University economist Mike Walden takes a look at some of the big shifts we’ve seen in recent decades:
Certainly if you look at several decades … we certainly have shifted in how we’ve spent our money. We’re spending a lot less of our income on what might be called the essentials –housing, food, and clothing, and we’re also, however, spending more on things like health care, recreation and education, which some might say, except for health care, are non-essentials.
Now these changes, economists think, reflect both changes in prices as well as preferences. For example, we’re spending less on food and clothing because food and clothing prices in general have fallen over the last several decades. The financing of homes, until recently, also has become easier.
On the other hand, we’re spending more for health care probably due to a combination of using more health care as well as health care prices have gone up. And we’re spending more on recreation and education because we’re using more of both of those services.
So, there’s no question that … how we live and how we spend our money has changed dramatically over the last three or four decades.