Monday, February 6, 2017

What Would You Like to Buy?

Lior Regev
Jerusalem Institute for Policy Research

One of the indices of a country’s economic status is the rate of ownership of durable goods. Durable goods are purchased once every few years and include, for example, furniture, cars, or electric appliances such as a refrigerator, stove, or washing machine. In the modern capitalist economy, which relies on the market system and private property, ownership of durable goods serves as an indicator of a household’s economic welfare and standard of living.

The Central Bureau of Statistics (CBS) conducts an annual survey that examines ownership of various goods and services, among other factors (Survey of Household Expenditures). The list of goods whose ownership the CBS examines is updated annually, in accordance with economic development and technological preferences. A review of previous surveys finds that in the past it examined ownership of video players, which was later updated to DVD players. Perhaps future surveys will examine ownership of wrist-band microchips that project movies onto walls….

For some goods, increasing ownership rates corresponded with a rising standard of living, but the increase over the years was gradual. For example, the percentage of Israeli households that owned at least one vehicle was 55% in 1999, 58% in 2005, 62% in 2009, and 65% in 2014.

A comparison across cities finds that differences in vehicle ownership rates are relatively small. In 2005, 50% of Jerusalem households owned a vehicle – very comparable to rate for Tel Aviv (50%) and slightly lower than the rate for Haifa (53%). A decade later, in 2014, 60% of Tel Aviv households owned a vehicle – comparable to the rate for Haifa (61%) and higher than the rate for Jerusalem, at only 56%. The relative consistency of vehicle ownership rates reflects the high cost of owning this means of transportation and the economic stratification of households in Israel.

For other goods, ownership rates saw a dramatic increase over the years, as well as differences across various cities. The most salient example is air conditioners, which were seen historically as less necessary in Jerusalem given its comfortable climate relative to cities in central Israel. In 1999, for example, only 12% of Jerusalem households reported owning an air conditioner, compared with 42% in Tel Aviv and 39% in Haifa.

The rising standard of living alongside global warming has transformed air conditioners from a luxury item into a good that is essential for surviving the interminable Israeli summer. In 2014, a decisive majority (94%) of Tel Aviv households reported that they own an air conditioner. In Haifa the rate was 84%, comparable to the figure for Israel (82%). Jerusalem, too, has shown a significant increase in recent years, from 41% in 2009 to 60% in 2014, but it still has a long way to go to catch up with the coastal cities.

Translation: Merav Datan

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