The Economics of 'Giving Up': Why Housing is Driving the Crypto Pivot

Their study, 'Giving Up': The Impact of Decreasing Housing Affordability on Consumption, Work Effort, and Investment, finds that the collapse in housing affordability is actively reshaping the behavioral psychology of the American workforce.

The findings are stark: as home prices outpace wages, households with below-median wealth are quietly abandoning the goal of homeownership. This triggers a "giving up" mechanism where renters reduce work effort, increase credit card spending, and pivot toward high-variance assets like cryptocurrencies.

The logic is simple but devastating. When the traditional path to stability, saving wages to buy a home, becomes mathematically impossible, the incentive to save evaporates. In its place, households choose to smooth consumption now or take moonshot risks as a last-ditch attempt at upward mobility.

The Three-Front Crisis

The data confirms that this "giving up" is a rational response to a structural squeeze. Since 1980, the cost of the three pillars of economic security, housing, education, and healthcare, has completely decoupled from wage growth.

Housing: In 1980, the average US home cost $73,600 against an annual wage of $11,960 (a 6.16x ratio). By 2025, that ratio climbed to 8.96x, with prices rising 45.5% faster than wages over the period.

Education: Tuition and fees have grown 177% more than wages since 1980.

Healthcare: Medical costs have risen 71% faster than earnings.

This divergence explains why younger cohorts face structurally lower odds of wealth accumulation. The cost of living hasn't risen due to lifestyle inflation; the essential inputs for stability have been repriced out of reach.

Repricing Through a Hard-Money Lens

When viewed through the lens of hard assets, the housing crisis looks less like a property bubble and more like a currency failure.

Measured in gold, US housing prices have been effectively flat for 45 years. Since 1980, the average home has risen only 6% in gold terms, while exploding 647% in dollar terms. Because gold historically anchors purchasing power, this stability suggests the dollar, not the house, is the primary mover. The surge in nominal home prices is essentially a reflection of the currency’s long-run debasement.

Labor’s Lost Purchasing Power

For the average worker, this debasement is catastrophic. Today’s average annual wage buys only 9.35% as much gold as it did in 1980, meaning over 90% of labor's hard-asset purchasing power has evaporated.

The picture is equally grim against the money supply. Wages have fallen to 26.6% of their 1980 share relative to M2. In short, workers command a quarter of the economy’s money supply compared to four decades ago. Fiat wages have failed to keep pace with either hard assets or monetary expansion, leaving labor running on a treadmill that is spinning four times faster than it used to.

The Rationality of Risk

Against this backdrop, the pivot to high-risk assets is not reckless; it is a calculated survival strategy.

If traditional saving cannot secure a home, upside speculation becomes the only viable alternative. A 2025 report by the National Cryptocurrency Association (NCA) estimates that 55mn American adults now own cryptocurrency, with 60% citing investment potential as their primary driver.

For these investors, Bitcoin represents a modern counterpart to gold, a scarce asset outside the fiat system. While gold preserved wealth over the last half-century, its stability offers no escape velocity for those starting with nothing. Bitcoin, with its higher volatility and "digital gold" narrative, offers the asymmetric upside that labour income can no longer provide.

The Lee and Yoo study confirms this shift is not just anecdotal. It is a structural economic migration: from a system where labour bought stability, to one where only risk buys a future.