Why it will be much cheaper to live in the future … the declining cost of food, transport, healthcare, education and more.
August 26, 2018
Life will be much cheaper in the future, at least in terms of how much we will spend on the normal things in life today. Perhaps we will suddenly need to save up for vacations on Mars, to acquire a humanoid friend (or servant), whilst we might dream of asteroid-sourced jewellery. But if we stick to what we know, we should be spending less. Of course we might earn less too, particularly if machines can do what we do for a fraction of our cost. But that’s another story.
A recent article by Ray Kurzweil got me thinking about the declining costs of basic human needs. On average we tend to spend money on many of the same basic products and services. Consider how consumers spend their money in three large economies:
- In the US, in 2011, 33% of the average American’s income was spent on housing, followed by 16% spent on transportation, 12% spent on food, 6% on healthcare, and 5% on entertainment. In other words, almost 75% of Americans’ expenditures come from housing, transportation, food, personal insurance, health, and entertainment.
- In China, per a recent Goldman Sachs Investment Research report, there is a similar breakdown—food, home, mobility, and well-being make up the majority of the expenditures. Interestingly, in China, consumers care significantly more about looking good and eating better (and less about having more fun) than in the US—nearly half of consumer income goes to clothes and food.
- In India, with a population of 1.2 billion people, expenditures on food, transportation, and miscellaneous goods and services are most prominent. Rent/housing and healthcare represent a smaller portion of expenditures.
These differences likely represent cultural differences in each of the three very different countries, but overall, you see that the majority of expenditures are in these top 7 categories:
Additional gains will be made as we learn to efficiently produce foods locally through vertical farming (note that 70% of food’s final retail price comes from transportation, storage and handling). Also, as we make genetic and biological advances, we will learn how to increase yield per square meter.
When the likes of Uber roll out fully autonomous services, your cost of transportation will plummet. Think about all of the related costs that disappear: auto insurance, auto repairs, parking, fuel, parking tickets. Your overall cost of “getting around” will be 5 to 10 times cheaper when compared to owning a car. This is the future of “car as a service.” Ultimately, the poorest people on Earth will be chauffeured around.
Think about what drives high housing costs. Why does a single-family apartment in London cost £10 million, while the same square footage in Sunderland can be purchased for £100,000? New technologies like autonomous vehicles and augmented reality will make the proximity of your home to your job irrelevant, meaning you can live anywhere. Plus houses will become cheap to build. A number of startups are now exploring how 3D printed structures and buildings can dramatically reduce the cost of construction and the amount of time it takes to build a building.
Five thousand times more energy hits the surface of the Earth from the Sun in an hour than all humanity uses in a year. Solar is abundant worldwide. Better yet, the poorest countries on Earth are the sunniest. Today, the cost of solar has dropped to approx $0.03 kWh. The cost of solar will continue to demonetize through further material science advances (e.g. perovskite) that increase efficiencies.
Coursera, Khan Academy, and schools like Harvard, MIT and Stanford have thousands of hours of high-quality instruction online, available to anyone on the planet with an Internet connection. But this is just the beginning. Soon the best professors in the world will be AIs able to know the exact abilities, needs, desires and knowledge of a student and teach them exactly what they need in the best fashion at the perfect rate. Accordingly, the child of a billionaire or the child of a pauper will have access to the same (best) education delivered by such an AI, effectively for free.
Healthcare can be roughly split into four major categories:
(i) Diagnostics: AI has already demonstrated the ability to diagnose cancer patients better than the best doctors, image and diagnose pathology, look at genomics data and draw conclusions, and/or sort through gigabytes of phenotypic data… all for the cost of electricity.
(ii) Intervention/Surgery: In the near future, the best surgeons in the world will be robots, and they’ll be able to move with precision and image a surgical field in high magnification. Each robotic surgeon can call upon the data from millions of previous robotic surgeries, outperforming the most experienced human counterpart. Again, with the cost asymptotically approaching zero.
(iii) Chronic/Eldercare: Taking care of the aging and the chronically ill will again be done most efficiently through robots.
(iv) Medicines: Medicines will be discovered and manufactured more efficiently by AIs and, perhaps in the near future, be compounded at home with the aid of a 3D printing machine that assembles your perfect medicines based on the needs and blood chemistries in that very moment.
Entertainment (video and gaming) historically required significant purchases of equipment and services. Today, with the advent of music streaming services, YouTube, Netflix and the iPhone App Store, we’re seeing an explosion of available selections at the same time that the universe of options rapidly demonetizes. YouTube has over a billion users—almost one-third of all people on the Internet—and every day, people watch hundreds of millions of hours on YouTube and generate billions of views.