Food and Drink

Groceries in November 2025 are the Most Affordable They Have Ever Been

Jeremy HorpedahlLeave a comment

In surveys more than two-thirds of Americans say they are are struggling with the cost of groceries. And yet, relative to average wages:

The chart shows a simple measure of relative grocery affordability. Starting with the levels of wages and grocery prices in 1947, if in any year wages increase more than prices, the line goes up (it can also go down, as it does in some years). Cumulatively, you can see that today groceries are over twice as affordable as in 1947.

You could reasonably complain that there hasn’t been much progress since the early 1970s. Fair enough. But there has been significant progress since the 1990s. Even if the progress is less than we would have liked, groceries are still, right now, the most affordable they have ever been in the US relative to average wages. And since US consumers spend by far the lowest share of their income on groceries in the world, we might be tempted to say that right now groceries in the US are the most affordable they have ever been in human history. Period.

This is not just a trick of using average wages, which can be distorted by outliers. First, we are already using an average wage series that strips out the highest earners (supervisors, managers, etc.). But we can show this more clearly by using a median-wage series, such as the CPS series (calculated by EPI) starting in 1973. Notice this affordability trend gets slightly better if we use median wages from 1973-2024:

It’s true that using the median wage series, 2020 and 2021 look more affordable than 2024 — but that’s because the compositional effects of the job losses in the pandemic really throw off the median wage. But the growth rate since 1973 is slightly better for median rather than average wages — it’s not a trick! And when we have the median wage data for 2025, it will also likely be the most affordable measure on this chart.

So why are people so pessimistic if wages have been rising faster than grocery prices? One theory: availability bias. People focus on the prices where they notice goods becoming less affordable, but ignore the ones that are more affordable. Many consumers could probably tell you that a dozen eggs increased from $1.40 per dozen in November 2019 to $2.86 today, and at times was much higher, topping $6 briefly in early 2025. Likewise they could tell you that a pound of ground beef soared from $3.81 in late 2019 to $6.54 today. Both of these prices increases vastly exceed wage increases over the same timeframe (about 33 percent for wages), but most consumers probably couldn’t tell you that these were outliers and most major categories of food increased by less than average wages since late 2019:

While the “beef and veal” category has clearly outpaced wages — by almost twice as much! — nearly every other category of meat and as well as other food product prices increased less than wages. Poultry is the one exception, though here it is almost equal to wage increases. But if we are talking about pork or fish, or the non-meat categories, most food is more affordable than in late 2019 relative to wages. Consumers won’t as easily identify these more affordable categories, and they probably have no idea how much average wages increased.

Bad Claims About Food Stamps (SNAP)

Jeremy Horpedahl11 Comments

One of the likely effects of the federal government shutdown is that recipients of SNAP benefits (what used to be officially called “food stamps,” a term still used by the general public, especially those that dislike the program) may lose their benefits next month. This would obviously be a hardship for those that depend on this program, but it has also led to bad claims being made about the program, from both supporters and opponents of the program.

Let’s start from the political right: Matt Walsh makes the claim that by subsidizing food consumption “obviously drives up the cost” of groceries.

As with all bad claims, there is a nugget of truth baked into them. If the government subsidizes anything, we would expect demand to increase, and thus unless supply is perfectly elastic, there will be some effect on prices. However, we need to think more carefully about the nature of the subsidy.

The way SNAP works is that beneficiaries receive an electronic voucher to spend at the grocery store, which is about $300 per month on average for a household. That $300 must be spent on groceries. However, if that household had already planned to spend $300 or more on groceries, it is unlikely they will spend all of the additional $300 on food. In the limit, it’s entirely possible they will spend no additional money on groceries, merely reducing their out-of-pocket spending on groceries by $300. They will then effectively have $300 more to spend on other goods. More likely is that they will spend some of the additional $300 on groceries, and some of it on other goods.

Many studies have tried to look at the extent to which SNAP benefits affect household spending, but these were mostly observational studies. There was no treatment and control group. But a 2009 paper titled “Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program” has a better approach to studying the question. Since the original Food Stamp program was slowly rolled out across the country over more than a decade, you can compare counties that entered the program first to counties that entered it later. By doing so, Hilary Hoynes and Diane Schanzenbach find out some first interesting things about the causal effects of SNAP benefits.

For the claim by Walsh in his Tweet, the most relevant result from the paper is that food stamps impact household spending similarly to a cash transfer. Yes, the program increases household spending on groceries, but it also increases spending on other goods and services. And it does so almost identically to how cash transfers impact household spending. In other words, while pitching the program as assistance for buying groceries may make it more politically palatable, SNAP benefits are no different from a similarly-sized cash transfer for the average recipient. If they do cause any inflation, they do so in the same way as a cash transfer would, and thus there is no specific impact on food inflation.

A second bad claim about SNAP comes from the political left, in this case Minnesota Governor Tim Walz:

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All of the Prices

Zachary BartschLeave a comment

Today I’m just sharing a truly awe-inspiring resource. The University of Missouri has what is essentially a central clearinghouse for prices and wages. If you want the price of anything, then they should be your first stop.

See the screenshot at the bottom. The website links to the original sources for household consumption prices, occupation wages, etc. They make it easy to cut the data by date, industry, location, etc. Because they cite their sources, you can see some data series that are not even available on FRED – without having to perform the painful sleuthing on a government website.

I especially like this site for its historical data. One of the challenges of historical US data is that individual cities may not have prices that are representative of the national levels or trends. Lower levels of market integration make representative samples even more important than in modern data. But really, that was more of a concern for 20th century researchers. Now, we love our panel data. So, the historically less integrated markets of the US provide ‘toy economies’ that include greater regionalism and local shocks.

Although David Jacks has loads of tabulated data, he doesn’t have it all. The Missouri library site links to PDFs of original statistical publications which, while digitized, have never been tabulated into useable data fit for modern researchers.

Go have a look around. You won’t regret it.

https://libraryguides.missouri.edu/pricesandwages/1870-1879

Children Don’t Die Like They Used To

Zachary Bartsch2 Comments

Academics generally agree on the changing patterns of mortality over time. Centuries ago, people died of many things. Most of those deaths were among children and they were often related to water-borne illness. A lot of that was resolved with sanitation infrastructure and water treatment. Then, communicable diseases were next. Vaccines, mostly introduced in the first half of the 20th century, prevented a lot of deaths.

Similarly, food borne illness killed a lot of people before refrigeration was popular. The milkman would deliver milk to a hatch on the side of your house and swap out the empty glass bottles with new ones full of milk. For clarity, it was not a refrigerated cavity. It was just a hole in the wall with a door on both the inside and outside of the house. A lot of babies died from drinking spoiled milk. 

Now, in higher income countries, we die of things that kill old people. These include cancer, falls that lead to infections, and the various diseases related to obesity. We’re able to die of these things because we won the battles against the big threats to children. 

What prompts such a dreary topic?

I was perusing the 1870 Census schedules and I stumbled upon some ‘Schedule 2s’. Most of us are familiar with schedule 1, which asks details about the residents living in a household. But schedule 2 asked about the deaths in the household over the past year.  Below is a scan from St. Paul, Minnesota.

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Now Published: Prohibition and Percolation

Zachary Bartsch2 Comments

My new article, “Prohibition and Percolation: The Roaring Success of Coffee During US Alcohol Prohibition”, is now published in Southern Economic Journal. It’s the first statistical analysis of coffee imports and salience during prohibition. Other authors had speculated that coffee substituted alcohol after the 18th amendment, but I did the work of running the stats, creating indices, and checking for robustness.

My contributions include:

  • National and state indices for coffee and coffee shops from major and local newspapers.
  • A textual index of the same from book mentions.
  • I uncover that prohibition is when modern coffee shops became popular.
  • The surge in coffee imports was likely not related to trade policy or the end of World War I
  • Both demand for coffee and supply increased as part of an intentional industry effort to replace alcohol and saloons.
  • An easy to follow application of time series structural break tests.
  • An easy to follow application of a modern differences in differences method for state dry laws and coffee newspaper mentions.
  • Evidence from a variety of sources including patents, newspapers, trade data, Ngrams, naval conflicts, & Wholesale prices.

Generally, the empirical evidence and the main theory is straightforward. I learned several new empirical methods for this paper and the economic logic in the robustness section was a blast to puzzle-out. Finally, it was an easy article to be excited about since people are generally passionate about their coffee.

Bartsch, Zachary. 2025. “Prohibition and Percolation: The Roaring Success of Coffee During US Alcohol Prohibition.” Southern Economic Journal, ahead of print, September 22. https://doi.org/10.1002/soej.12794.

We Don’t Have Mass Starvations Like We Used To

Zachary BartschLeave a comment

Two ideas coalesced to contribute to this post. First, for years in my Principles of Macroeconomics course I’ve taught that we no longer have mass starvation events due to A) Flexible prices & B) Access to international trade. Second, my thinking and taxonomy here has been refined by the work of Michael Munger on capitalism as a distinct concept from other pre-requisite social institutions.

Munger distinguishes between trade, markets, and capitalism. Trade could be barter or include other narrow sets of familiar trading partners, such as neighbors and bloodlines.  Markets additionally include impersonal trade. That is, a set of norms and even legal institutions emerge concerning commercial transactions that permit dependably buying and selling with strangers. Finally, capitalism includes both of these prerequisites in addition to the ability to raise funds by selling partial stakes in firms – or shares.

This last feature’s importance is due to the fact that debt or bond financing can’t fund very large and innovative endeavors because the upside to lenders is too small. That is, bonds are best for capital intensive projects that have a dependable rates of return that, hopefully, exceed the cost of borrowing. Selling shares of ownership in a company lets a diverse set of smaller stakeholders enjoy the upside of a speculative project. Importantly, speculative projects are innovative. They’re not always successful, but they are innovative in a way that bond and debt financing can’t satisfy. Selling equity shares open untapped capital markets.

With this refined taxonomy, I can better specify that it’s not access to international trade that is necessary to consistently prevent mass starvation. It’s access to international markets. For clarity, below is a 2×2 matrix that identifies which features characterize the presence of either flexible prices or access to international markets.

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Understanding Data: A Chart on Gen Z and Alcohol

Jeremy HorpedahlLeave a comment

Have you seen this chart?

The chart originates from Statista, as you can see from the label in the image. But it is very frequently shared on social media, Reddit, and elsewhere (often with the Statista label clipped), occasionally generating millions of views and lots of heated comments.

But it’s a bad graph. In so many ways. Let’s break them down.

The data comes from BLS’s Consumer Expenditures Survey. I use this data frequently, as regular readers probably know. The data in the viral chart is from 2021 (more on that in a moment), but if I create a similar chart using the most recent data in 2023 but also include spending by those older than Baby Boomers (primarily the Silent Generation), you will notice a curious thing:

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An Egg-cellent Consumer Surplus Calculation?

Zachary BartschLeave a comment

There was a recent Planet Money Podcast episode that includes a fun exercise. An NPR employee produces a dozen chicken eggs and wants to sell them at cost to another employee for $5. That’s the setup. How does the employee decide who should receive the eggs? Clearly, the price mechanism won’t work since the price is fixed. A lottery is also not allowed. The egg recipient could engage in arbitrage, reselling the eggs for a higher price. But that’s not very likely and would be socially awkward. The egg producer wants to make someone happy. Who would he make the happiest?

That’s the challenge that the Planet Money team tries to solve.

First, they started with a survey. Rather than asking coworkers to rank a long list of things that includes eggs, the survey adopts a more robust method of pairwise comparisons. Do you prefer toast vs eggs? Eggs vs oatmeal? Toast vs oatmeal? and so on. One problem that they encounter, however, is that there is a lot of diversity among preparations methods. My oatmeal is better than my eggs. But my brother’s oatmeal is not. As it turns out, there is not a standard quality of prepared oatmeal and prepared eggs. So the survey is a flop.

Then they consult an economist. They decide to try to measure “willingness to pay”, which is an economic concept that identifies the maximum that a person could pay for something without becoming worse off. They couldn’t really ask the coworkers what their WTP is. People are social creatures and have many reasons to lie, mislead, signal, and to simply not know. Since someone’s WTP reflects preferences and values, we need a way to solicit the true preference while avoiding lies and most mistakes. Here’s how the economist suggested that they reveal the coworker preferences.

  • Step 1: Tell the coworker these rules.
  • Step 2: Coworker reports their WTP for a single egg in dollars
  • Step 3: A random price will be chosen by a machine. If the price is above the self-reported WTP, the coworker is not allowed to buy the egg. If the price is below the WTP, then the coworker must buy the egg at the random price.

The idea is as follows.

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Why Chicken Is So Affordable: The Revolutionary Cornish Cross Broiler

Scott Buchanan2 Comments

Chickens were apparently domesticated from the red jungle fowl (Gallus gallus), a native of southeast Asia, thousands of years ago. Humans have been selectively breeding them ever since. Traditionally, chickens were valued mainly for their eggs. Surplus roosters would get eaten, of course, and tough overage laying hens would end up in the stewpot. But your typical chicken was a stringy, hardy bird whose job was to stay alive and to lay eggs.

Raising chickens en masse just for eating started in 1923 with Celia Steele of southern Delaware, somewhat by accident. She wanted to set up a small flock of egg-laying chickens to supplement her husband Wilmer’s Coast Guard salary. She placed an order for 50 chicks, but it was mistakenly heard as 500. When she got this huge shipment, she thought fast and decided to raise them to eating size (“broilers”) and then immediately sell them. She built a coop designed for grow-out, rather than for egg-laying. This enterprise was profitable, so she expanded operations. She doubled production the next year, and by 1926 she had 10,000 chickens. Her neighbors saw her success, and also went into the broiler biz. Thus was spawned the modern broiler industry. All this was aided by the general prosperity in the 1920s, together with technical progress in refrigeration and transportation. Her first broiler house is now on the U.S. Registry of Historic Places.

Source   Chicken Pioneer Celia Steele

However, chickens themselves were still scrawny by today’s standards. As of 1948, chicken meat was still an expensive luxury. With the broiler (meat chicken) market established, breeders naturally tried to develop strains that would grow big and fast. That not only allows more meat to be grown in a given flock, but fast growth means less feed is consumed to get to market weight.

For several years around 1950, A&P Supermarkets sponsored a “Chicken of Tomorrow” program, overseen by the USDA, to promote improved broiler breeding. As examples of chickendom as of 1948, here are plucked carcasses of contestants for the Chicken of Tomorrow contest of that year. Note how stringy they are, compared to the plump, meaty bird you buy at the grocery store today:

Judges evaluating 1948 Chicken of Tomorrow entries at the University of Delaware Agricultural Experiment Station. Photo courtesy the National Archives.

Without going into much detail, the ultimate product was a cross (hybrid) between the Cornish chicken and other breeds. Cornish cross chickens were initially bred for size and growth rate. By say the 1990s, that led to birds that were so heavy that they sometimes could not support their own weight. More recent breeding programs promote leg strength and other health factors, as well as sheer growth.

Example of modern Cornish cross broiler

To produce today’s optimized broiler is a complex process. Breeders must maintain something like four purebred strains, and then carefully cross-breed them, and then cross-breed some more, to get the final hybrid chick to send out for farmers to raise. Only these hybrids have the optimized characteristics; you can’t just take a bunch of these crossed chickens and breed a good flock from them:

Multiplication from pure lines to commercial crossbreeds in broiler breeding

Only a few large outfits can afford to do this, so most hatcheries are supplied by a handful of big breeders. However, there seems to be enough competition to keep the prices down for the consumer. Some folks will always find something to complain about (reduced genetic diversity or hardiness, etc.), but they are welcome to breed and grow less efficient chickens, if it pleases them.

In terms of dollars: “The inflation-adjusted cost of producing a pound of live chicken dropped from US$2.32 in 1934 to US$1.08 in 1960. In 2004, the per-pound cost had dropped to 45 cents, according to the USDA Poultry Yearbook (2006).”

According to the National Chicken Council, in 1925 it took a broiler chicken an average of 112 days to reach a market weight of 2.5 pounds. As of 2024, the market weight has soared to 6.5 pounds, and chickens reach that weight much faster, in 47 days (about the time it takes leafy green vegetables). The net result is that now it only takes about 1.7 pounds of feed to grow one pound of chicken, compared to 4.7 lb/lb in 1925. This nearly three-fold reduction in resource consumption translates into lower consumer costs, lower load on the environment and agricultural resources, and even lower CO2 generation. The largest jump feed conversion efficiency (from 4 to 2.5 lb/lb) occurred between 1945 and 1960, thanks to the development of the Cornish cross.