How has the traditional focus on wage rates and on grain or bread prices biased our view of real-wage trends and inequality trends within countries?
If one just expanded the cost-of-living deflator to include such familiar non-food goods as beverages, clothing, fuel, and light, then the traditional real-wage studies would not need a massive adjustment.
We could end up seeing only that average real incomes declined a bit less in this era than past studies of the food wage have implied.Yet, the partial expansion of the cost-of-living bundle should not stop there. It should also explore how the cheapening of luxuries relative to staples interacts with those differences in expenditure shares illustrated back in Table 6.2. By omitting these interactions, past studies have missed the inegalitarian feature of cost-of-living trends before the early nineteenth century. That is, difficulties in both concepts and data have caused us to underestimate the widening of the economic gaps within nations. This is true not only of the real-wage literature but also of the literature that has followed nominal income inequality.14 It is time to probe more deeply into real-income inequality.
The next step is to supplement the introduction of a few luxury goods in Table 6.3, Figure 6.2, and Table 6.4 with further discussion of two particular differences in lifestyle between top and bottom income classes. With these in view, we will be able to construct class-specific cost-of-living indices and measures of trends in real-income inequality.
6.1