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In the movie Inside Job, Matt Damon makes the following claim:

For the first time in history, average Americans have less education and are less prosperous than their parents.

Is that true? What measurements of prosperity support his point and which measurements disagree? If it's true that Americans are now less prosperous and educated than their parents, is this the first time in history that has ever been the case?

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I've heard this not just about Americans, but most of the western world. –  Mark Henderson Feb 18 '13 at 2:02
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Unless Matt Damon makes a more specific claim with regards to education, I think it'd be best if we focused on the quantity of education rather than the quality of said education. –  Andrew Grimm Feb 18 '13 at 6:27
    
The prosperity claim, for average Americans, ought to follow the historical Gini coefficient, and for the USA from 1967-2007 income equality disparity has grown. That being said, aggregate income growth may offset the distribution inequality, but that does not look to have been the case when one accounts for cost of living increases. On prosperity, this claim seems plausible. –  Brian M. Hunt Feb 18 '13 at 14:15
    
@BrianM.Hunt Is income disparity a good metric? I thought it was better during the Great Depression than during the 1920s boom in the USA. –  Andrew Grimm Feb 18 '13 at 22:12
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up vote 20 down vote accepted

The second graph on this U.S. Census page negates the claim that Americans are less educated than their parents. Americans are more educated than ever in history.

Per capita income has also increased significantly in the past fifty years.

However, Matt Damon is talking about "average Americans" in this claim, so we would need to dig a little deeper to evaluate it. Let's assume that he means "the middle 20%" -- those people in the 40th-59th percentile of income. This is closer to the concept of a median than average, but who says "median American" these days?

In Table A-2 beginning on page 38 of this US Census report, the following numbers are shown for the middle 20% (third quintile):

  • 1967 - $41,670 (17.3% of income)
  • 2011 - $49,842 (14.3% of income)

Notice how income has increased for this group while its share of the country's income has decreased. This means that while "average" Americans make less than wealthier Americans today than they did in 1967, they also have more purchasing power than they did in 1967. They can buy nicer stuff and more of it.

The claim benefits from being vague, though. "Prosperous" could measured in other ways, since it's roughly synonymous with "success," and success can be interpreted many ways. Were I arguing with someone about this in person, I would ask them to define "average American" and "prosperous" for the purposes of their argument before running around the Internet to gather answers. :)

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Does the income include inflation? –  Baarn Feb 18 '13 at 10:23
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Yes, the figures I posted are inflation-adjusted. –  Micah Feb 18 '13 at 14:18
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I can't find page 38 nor table A-2 in that report. I only saw income distribution in table 2. –  William Grobman Feb 18 '13 at 18:13
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Does this answer account for the amount of debt-per-capita, both personal debt typically held by an "average American" plus pro rata official debt? I would think that while PPP may indeed have risen, it seems to have only done so marginally, while the debt of an “average American” seems to have increased by magnitudes over the past 40 years. –  Brian M. Hunt Feb 18 '13 at 20:52
    
William: sorry about that. I linked to a report that cited the report I was referring to. The correct link is here: census.gov/prod/2012pubs/p60-243.pdf Brian: No, my answer doesn't account for debt-per-capita. I might contest the argument that a 19% increase in real income is "marginal" but I do agree that we could use more factors than income to measure prosperity. Again, this is one of the problems with the initial vague claim! –  Micah Feb 18 '13 at 21:10
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