Golf is as expensive or inexpensive as the individual wishes to make it.
For example, I can join Dallas National for $200,000 and $500 to $600 per month. I can also go back to my old private club for $0 initiation and $325 per month. While the latter can't compare to the former, it does have 18 holes, a practice facility, and a clubhouse.
Alternatively, I can join the player development program at Bear Creek for $33 per month, practice as much as I wish for that, and pay $17 to play after 1:00 (cart included). Or, for $100 for a good used set of clubs and another $10 for 100 practice balls, I could find a park some place, hit my own balls, chip and putt at the public facilities, and clip 50% off coupons to play a couple of times per month. Total cost = $500 +/-, or one round at Pebble Beach in a cart and a burger and one beer in the Tap Room.
For core golfers- anyone on this site including non-playing contributors like Dan King and Geoff Shackelford, golf is more of an important lifestyle element than mere recreation or a passtime (as it is for those who go to the park and throw a frisbee or a football around). Even the once-a-month, 30-handicapper will call himself a golfer, whereas very few of us who participate in an occasional flag-football game think of ourselves as football players.
At least in my case, I evaluate golfing expenses against other so called necessities including housing, transportation, and insurance. It is in this context that I believe golf is a relatively inexpensive endeavor in comparison to the value and enjoyment I derive from it. And from the standpoint of inflation, golf in many areas has gotten cheaper through the last 5 - 10 years while taxes and insurances of all types have gone through the roof.
Bottom line, I don't believe that the cost of golf is a major factor in the decline of rounds played.