Comment

Borella, De Nardi, and Yang (2019) tackle an important question. They consider two cohorts of white, non-college-educated Americans: (i) those born between 1936 and 1945 (referred to as the 1940s cohort), and (ii) those born between 1956 and 1965 (referred to as the 1960s cohort). They consider three differences in the opportunities afforded to these cohorts: (i) potential wages, (ii) life expectancy, and (iii) out-of-pocket medical expenses. And they ask how these three differences in opportunities affected three differences in outcomes across the two cohorts: (i) labor supply, (ii) savings, and (iii) welfare. The authors reach a provocative conclusion. They write: “Our results thus indicate that the group of white, non-college-educated people born in the 1960s cohort, which comprises about 60% of the population of the same age, experienced large negative changes in wages, large increases in medical expenses, and large decreases in life expectancy and would have been much better off if they had faced the corresponding lifetime opportunities of the 1940s birth cohort.” If correct, this finding is worth repeating. Despite all the technological advances in health care, communication, and transportation; despite the progress that has been made on gender equality; despite the massive increase in international trade; despite iPhones and the internet; despite the fact that real gross domestic product per capita has grown by more than a factor of 2.5 in the 50 years from 1965 to 2015; and despite all these perceived improvements in life, more than half of the US population would have been better off had they been born 20 years earlier. In the following section, Iwill offer some casual observations of changes in the US economy over this time period that might make one skeptical that the 1940s cohort really was better off than the 1960s cohort. To shed light on the authors’ pessimistic conclusions, I will then explain why the authors’ assumptions about each of the three changing opportunities that