Misleading Housing Statistics on US Household Budget

Government  statistics should never be trusted as shown by the example below.

In questioning the U.S. Department of Agriculture’s (USDA) statistical treatment of the housing expenditure share of the household budget, Austrian economist Gary North writes:

What’s wrong with this? First, attributing 30% to the cost of housing. If a family puts three boys on one bedroom, and three girls in a second bedroom, the cost per child will plummet.

In fact, the housing expense for children is close to zero. Here’s why. All costs are marginal, economic theory teaches. What is the cost of those extra rooms? Almost zero.

When childless couples buy a home, do they buy a one-bedroom home? No. They buy at least a two-bedroom home. Most of them buy a three-bedroom home. But if the average American family buys extra bedrooms for show, the marginal cost of having a child live in that bedroom is zero. This is basic economics.

Do they immediately move out when the children depart? No. So, the marginal cost of the children’s occupancy was zero. Americans pay for bedrooms they don’t need. It’s aesthetic. It’s cultural. It’s the American dream.

I live in a three-bedroom home. Two of them are empty. I could easily convert two more rooms into bedrooms. I could adopt 10 children, and the housing costs would not rise much: the loss of one office, which could be moved into the basement, where there is another empty room. What did I pay for the house, plus the basement? About $225,000. I bought it in 2009. So, spare us the cries of high housing costs for children. These costs are marginal. The more kids you stick into a bedroom, the more marginal the costs are.

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Statistics have been designed to see society as one-size-fits-all phenomenon. Why? Because they are used as basis to justify interventionism. 

As the great dean of the Austrian school of economics, Murray N. Rothbard warned

Certainly, only by statistics, can the federal government make even a fitful attempt to plan, regulate, control, or reform various industries — or impose central planning and socialization on the entire economic system