Saturday, March 24, 2012

Education and healthcare as sources of middle class deprivation?

I have written about the coming middle class deprivation due to the rising cost of healthcare, education, housing, and energy prices.

In this context, Stephen Rose has two excellent graphics in The Atlantic. The first shows the relative changes in prices of household consumption basket in the US over 60 years. Health care and education stand out as items which have experienced the biggest increases in prices.

The second shows the relative changes in the shares of items in that basket over the past 40 years. Here too health care stands out. Its share of the household consumption basket has risen from 8.1% in 1967 to 18% in 2007.

Necessities like food and clothing, which gobbled up 42% of our spending in 1947, have dwindled to just 16% of spending by 2007.

The larger point, of relevance to countries like India, is that poverty and middle-class deprivation in the coming years will be driven by the increasing cost of health care and higher education.

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