We have data on the real income—that is, income adjusted for
inflation—of American families from 1947 to 2005. During the
first half of that fifty-eight-year stretch, from 1947 to 1976,
[the argument for deregulation was not well received] But the
economy...delivered dramatic improvements in the standard of
living of most Americans: median real income more than doubled.
By contrast, the period since 1976...free-market policies became
much more widespread. Yet gains in living standards have been
far less robust than they were during the previous period:
median real income was only about 23 percent higher in 2005 than
in 1976. Starting from a narrow perspective, why is the writer
not using real GDP per capita, the standard measure of economic
growth? Family income is distorted, over this period in
particular, by changes in family structure and size. If a
household shrinks from 4 to 2, family income falls in half, but
that is a misleading indicator of economic performance. It turns
out that real GDP per capita g