Class Summary #9 for 9/21/11

Today, Prof. Rizzo spent class presenting us with several different facts that prove how much better off we are in today's world compared to the past.

He also said that within the next few classes, we are going to begin to learn "real economics", so I am definitely looking forward to that.

Prof. Rizzo began class by showing us a pie chart which showed the typical expenditures of people in different eras.

In the 1790s, the typical American spent 75% of his/her income on food, and 91% on necessities as a whole.  In 1900, the typical American spends 44% on food and 76% on necessities. In today's day and age, the typical American spends 14% of his/her income on food and 32% on necessities.

What does this mean has happened to income?

1. Today, we have twice as much income to spend on other things, things we couldn't afford to spend on in past.
2. We are 14x better off now than ever before. In short, our income allows us to buy more because certain things are more affordable, we make more money, etc.

Additionally, many of the expenditures on the 2005 pie chart ceased to even exist on the 1790's version. On the 2005 pie chart, people spent their money on entertainment, soap/haircuts, education. This all shows that back in the 1790's those things weren't a priority because people didn't have enough money to use on other things besides necessities.

Also, in today's world, we could afford food prices if they doubled. 100 years ago, if prices doubled on food, we would all very likely die because we would not be able to afford it.

There are two major implications that everything above has on today's world, as explained by Prof. Rizzo. They are:

1. Risk- there is less of a risk nowadays because necessities (food) don't cost as much in comparison to our income. 
2. We can spend lots of money on other stuff because we don't have to spend as much money on food as we had to in the past.

Some more interesting facts Prof. Rizzo taught us today:

• The US government employs 20 million people, which comes out to about 1 in 7 Americans. The government is the biggest employer in the US.
• The US spends 1.2 trillion dollars on military/national defense. This is a result of our less spending on food- if we spent as much on food today as we did in past, we wouldn't be able to afford this level of national defense.
• In today's world, more people have cell phone subscriptions than people have access to clean toilets.
• We have more leisure time now than ever before: Men, on average, spend 8 hrs a week leisurely since 1965. Since 1965, women on average spend 6 hours a week leisurely.
• In 2007-2008, the price of wheat tripled. The last time that happened, 30% of the European population starved. This once again shows the progress we have made with income.
• The richer we become, the safer we become. Natural disasters aren't killing us as frequently as they did before, despite the fact that we continue to live in more and more dangerous areas than ever before.
• Homicides are down- before the IR, 35 per 100,000 people were killed of homicide. Today, that statistic is under 10 per 100,000.

Having this increase in come allows people to be different and have their own identity, because it is so easy to afford our own things, things that are not necessities.