It is the economy...and both adults in a family working now that is causing handicaps not to drop. People just don't have the time anymore to work on their games like we used to. Also golf prices are rising..substantially in my area...lessons/ equipment/ and round and membership prices. All this leads to less playing and practicing..which is why no one is really improving. The game of golf Is becoming its own worst enemy. ...it is truly alienating the middle and lower classes...very very very sad.
Golf is a predominately male sport, men have traditionally been the bread winners and have worked 40-60 hours for the last 10+ years. The role of the male in the family unit has changed over the years, but not only because a higher number of their spouses work but because we're more involved with our children.
When I was a kid, the males role was to work while the female took care of the house and kids. When men weren't working they had little household responsibility except to mow the lawn, take out the garbage, etc, so they had plenty of time for golf, fishing, bowling or any other hobby.
The economy is impacting the cost of everything, percentage wise I doubt the cost of golf has increased at a higher percentage than any other recreational activity. Range balls at my local range have gone up a $1 in 4 years, they used to be $12 for a large (120 ball bucket) in 2009 and now they are $13, hardly a reason to quit the sport or not practice.
Equipment, lessons and green fees need to be shopped for, you can buy the latest and greatest driver for $500 or buy last years latest and greatest for $100. You can often find discounted lessons if you shop them, buy them in bulk or you can just get a lot of great free advice here. Sites like Golfnow have reduced the cost of green fees and if money is a big concern you can always look at off peak times to get a fair price.
Overall I think the lack of improvement in handicap is more related to the inverted bell curve that handicaps follow for the average person and population trends.