I think folks are spending quite a bit more on things they need which used to be much cheaper. Healthcare and higher education come to mind as expenses which have started to eat the average family's budget much more than in the past. The medicine is much better today than in the 50's of course.
We ought to include a full picture of required spending in relation to housing costs.
On the other hand, essential costs like food and clothing have dropped substantially over time. In the 40s and 50s food and clothing accounted for approximately 50% of one's disposable income. Now it is closer to 30%.
But your comment does raise an interesting question: If I were to hypothetically spend $100,000 for an optional status symbol like a Ferrari or higher education and can no longer afford to own a home due to that purchase, does that indicate a problem with the housing market?
People that can't afford housing don't buy Ferraris and they spend money on higher education because that is sold to the entire populace at large as the way to get ahead.
Further good jobs use it to distinguish between those who are worth looking at and those that aren't even where the education isn't truly required to do the job.
Also we really don't want to admit to ourselves that the biggest step up would be to go back in time and drop out of the right uterus.
Huh. I'd always considered the definition of disposable income as the income that I would literally consider to be disposable, e.g. the money left over after I've covered everything I need (including housing, clothing, food and taxes) that I could set on fire and not change my current condition.
Per the wikipedia article of disposable income, I could afford a Ferrari (on a payment plan), but I would generally say I don't have the disposable income to afford a Ferrari because I still have to pay rent and feed myself.
Obviously the article defines that as discretionary income, I've always considered them to be equivalent terms.
> after I've covered everything I need (including housing, clothing, food and taxes) that I could set on fire and not change my current condition.
Housing and taxes make sense because they're generally inflexible costs, but how does clothing fit into this? Unless you're sewing smocks out of burlap, the majority of most people's clothing expenses is fully discretionary in every sense of the word (even including work clothes, for those unfortunate enough to have their employer force them to dress a certain way). That isn't to say it's a waste of money, but it's discretionary in the same way that eating at nice restaurants or going to concerts is: something you spend not to survive, but to improve your quality of life in some way.
These are standard economic terminology, not definitions made up by the article writer or wikipedia.. They're can be found in probably every introductory economics textbook from the past half century.
We ought to include a full picture of required spending in relation to housing costs.