Comparing living standards

In: Uncategorized

3 Jun 2010

An interesting post on Chris Dillow’s blog on the difficulties of comparing past and present living standards. Evidently a recent study by the Institute for Fiscal Studies shows that a moderately poor person in Britain today is better off than a reasonably rich one in 1961. This is based on a comparison of real incomes.

However, there are caveats on both sides. In some respects it underestimates the prosperity of today’s poor. For example, no one in 1961, no matter how rich, could get a mobile phone or internet access. On the other hand, housing costs have risen particularly steeply in the past four decades and the roads have become a lot more congested.

I strongly believe that living standards tend to rise with economic growth. However, the picture is not a simple one.

Meanwhile, Der Spiegel reports today on the start of austerity measures in Germany.