Claim 11 of 22
Housing costs: fixed costs decide what a household can save
Do fixed costs decide how much a household can save?
Verdict
Holds with conditions
Housing is the largest category of spending in each of the three sources, with transport second in the US and UK sources and third (after food) in the Australian one, and in the UK data housing (net), fuel and power takes a larger share of spending for poorer households, so fixed costs set the room a household has to save. "Decide" is a causal word and the statistics describe shares, so the claim holds as a description of where the money goes, and the change over a generation that The Two-Income Trap describes lies outside these single-year figures.
What it leaves open. Housing and transport took 50.4 per cent of average US spending in 2024 and left $28,782 after housing, transport and food, and whether costs of that size cause low saving, as "decide" implies, needs evidence that follows the same households over a generation.
Made by: The Two-Income Trap (2003), Olen.
Test it on your own numbers
- United States: Consumer Financial Protection Bureau, Find a housing counselor (consumerfinance.gov/find-a-housing-counselor), to search by ZIP code for approved housing counsellors.
- United Kingdom: GOV.UK, Benefits calculators (gov.uk/benefits-calculators), to check Universal Credit (the UK benefit for people on low incomes or out of work) and Council Tax Reduction (a cut in the Council Tax bill for people on low incomes) on an independent calculator.
- Australia: Services Australia, Rent Assistance (servicesaustralia.gov.au/rent-assistance), to check whether it is assessed with an eligible payment or rent change.
The full test, with every figure dated and sourced, is in chapter 11 of the book.