Affordability, Part I – Paul Krugman | Substack

Report on Economic Affordability and its Alignment with Sustainable Development Goals

Introduction: Re-evaluating Affordability Beyond Traditional Economic Metrics

Recent political discourse has centered on the theme of “affordability,” indicating that standard economic indicators, such as real income, are insufficient for assessing public well-being. While real income provides a baseline measurement, it fails to capture the multifaceted nature of economic hardship and its impact on sustainable development. A comprehensive understanding of affordability must incorporate broader principles that align directly with the United Nations Sustainable Development Goals (SDGs), particularly those aimed at eradicating poverty and reducing inequality.

Core Dimensions of Affordability and Linkages to the SDGs

An analysis of public sentiment reveals that the concept of affordability is underpinned by three critical components. These dimensions are intrinsically linked to the successful implementation of the 2030 Agenda for Sustainable Development.

1. Economic Inclusion

   This refers to the capacity of individuals to acquire the goods and services necessary for full participation in society. A lack of economic inclusion directly impedes progress on several SDGs.

   • SDG 10 (Reduced Inequalities): Economic inclusion is fundamental to ensuring that all people, irrespective of income, have the opportunity to participate in and benefit from economic prosperity.
   • SDG 1 (No Poverty): The inability to afford basic necessities for social participation is a key dimension of poverty and social exclusion.
2. Economic Security

   This dimension relates to the assurance that individuals are protected from sudden and severe financial hardship. Economic security is a prerequisite for building resilient societies.

   • SDG 1 (No Poverty): This goal calls for the implementation of social protection systems (Target 1.3) to safeguard the poor and vulnerable from economic shocks.
   • SDG 8 (Decent Work and Economic Growth): Economic security is enhanced through stable employment, fair wages, and protection for all workers, which are central tenets of this goal.
3. Economic Fairness

   This involves public perception regarding the equity of the economic system, particularly whether high prices are a result of exploitation. Perceptions of fairness are crucial for social cohesion and institutional trust.

   • SDG 10 (Reduced Inequalities): Addressing the root causes of unfair pricing and wage disparities is essential for reducing inequality within and among countries.
   • SDG 16 (Peace, Justice and Strong Institutions): A sense of economic fairness strengthens trust in institutions and promotes a stable, just society.

Special Focus Area: The Challenge of Housing Affordability

Unaffordable housing represents a critical and tangible manifestation of the broader affordability crisis. This issue is explicitly addressed within the SDG framework and has cascading effects on other development objectives.

• SDG 11 (Sustainable Cities and Communities): The challenge directly contravenes Target 11.1, which aims to “ensure access for all to adequate, safe and affordable housing and basic services.”
• Interlinkages with other SDGs: The lack of affordable housing exacerbates poverty (SDG 1), negatively impacts health outcomes (SDG 3), and hinders access to quality education (SDG 4).

Conclusion: Towards an Affordability Agenda for Sustainable Development

A forward-looking policy agenda must address affordability not merely as an issue of income versus prices, but as a comprehensive challenge integral to achieving the Sustainable Development Goals. By focusing on the core dimensions of economic inclusion, security, and fairness, policymakers can develop strategies that foster equitable growth, reduce systemic inequalities, and build resilient communities in line with the 2030 Agenda.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 1: No Poverty
   • The article’s central theme of “affordability” is directly linked to ending poverty. It discusses the challenges people face with the “rising cost of living” and ensuring their income is sufficient to avoid hardship, which is the core of SDG 1. The concept of security, defined as “an assurance that severe hardship isn’t just a stretch of bad luck away,” also aligns with this goal’s aim to build resilience among the poor and vulnerable.
2. SDG 8: Decent Work and Economic Growth
   • The article analyzes the economic well-being of workers by questioning whether the economy is “worse for workers than it looks.” It discusses “real income,” “wage gains,” and the perception that “price hikes snatch them away,” all of which relate to the quality of employment and the economic benefits that workers receive, key components of SDG 8.
3. SDG 10: Reduced Inequalities
   • This goal is strongly connected through the article’s emphasis on economic inclusion and fairness. Economic inclusion is defined as “the ability to purchase the goods and services that allow someone to feel like a member in full standing of American society.” The discussion on fairness, where “people are especially upset about high prices when they feel that they are being taken advantage of,” directly addresses perceptions of inequality within the economic system.
4. SDG 11: Sustainable Cities and Communities
   • The article explicitly identifies “the special problem of unaffordable housing” as a key component of the broader affordability issue. This directly addresses the core of SDG 11, which aims to make cities and human settlements inclusive, safe, resilient, and sustainable, with a specific focus on ensuring access to adequate and affordable housing.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Under SDG 1 (No Poverty):
   • Target 1.2: “By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.” The article’s focus on affordability and the cost of living relates to how poverty is measured and experienced nationally.
2. Under SDG 8 (Decent Work and Economic Growth):
   • Target 8.5: “By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value.” The discussion of “real income” and whether wage gains are keeping up with inflation speaks to the quality and remuneration of work.
3. Under SDG 10 (Reduced Inequalities):
   • Target 10.2: “By 2030, empower and promote the social, economic and political inclusion of all…” The article’s concept of economic inclusion as the ability to participate fully in society directly mirrors the language and intent of this target.
4. Under SDG 11 (Sustainable Cities and Communities):
   • Target 11.1: “By 2030, ensure access for all to adequate, safe and affordable housing and basic services…” The article’s direct mention of “the special problem of unaffordable housing” aligns perfectly with this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Real Income:
   • The article explicitly mentions “real income — people’s income divided by a measure of the cost of living” as a standard economic metric. This can be used as an indicator to measure progress towards targets related to poverty (1.2) and decent work (8.5).
2. Cost of Living / Inflation:
   • The article repeatedly refers to the “rising cost of living,” “inflation,” and “price hikes.” The rate of inflation is a critical indicator for assessing affordability and the real value of wages (relevant to SDG 1 and SDG 8).
3. Housing Affordability:
   • While not defining a specific metric, the phrase “unaffordable housing” implies an indicator, such as the proportion of income spent on housing. This would be a direct measure for Target 11.1.
4. Perceptions of Inclusion, Security, and Fairness:
   • The article argues that concepts like economic inclusion, security, and fairness are “poorly captured by standard economic numbers.” This implies the need for qualitative or perception-based indicators (e.g., surveys measuring public sentiment on economic fairness or security) to fully assess progress on targets related to inequality (10.2) and poverty (1.2).

4. SDGs, Targets, and Indicators Table

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