Last week, relying on data posted by Indur Goklany on The Commons Blog, I claimed that gasoline is "more affordable than ever," despite the increase in real and nominal gas prices. Some commenters objected that this generalization is misleading due to a rise in income disparities. The price-to-income ratio for the average American may have dropped, largely because the rich got richer, without equivalent affordability gains for the poor.
Glen Whitman at Agoraphilia investigates this claim by examining the price-to-income ratio by quintile from 1973 to the present, and finds that even for the poorest fifth, gasoline is cheaper than it was at its peak.
So what can we see? Even looking at the poorest fifth of the population, the fraction of income required to buy gasoline is still lower than it was in the early '80s. Not surprisingly, the fraction has risen a great deal over the last few years, but it still has not surpassed its historical peak. The same holds true for every other income quintile, but the effect is more muted, since higher income means any given price difference will correspond to a smaller fraction of income. (If gas prices stay at their current price of about $2.90/gallon, however, then we could pass that early-80s high-water mark this year.)