What this lesson teaches
I can explain standard of living in material and non-material terms and why real income per head alone is not enough.
Syllabus 8843, 3.2.1(a). Standard of Living and Macroeconomics Indicators: Economies are primarily concerned with improving the standard of living; Standard of living involves material and non-material aspects, as measured by real national income per capita taking into account other indicators including income distribution, leisure time, quality of environment
Make a guess
Mei takes a job that pays 30% more but adds 10 hours of work a week and a long commute. Have her living standards risen?
- Her material living standards rose; her non-material ones fell.
- Yes. A 30% pay rise means she can afford a better life overall.
- No. Working longer makes her life worse, whatever she earns.
Show the answer
Her material living standards rose; her non-material ones fell.
She can buy more, but she has less leisure and more stress. Whether she is better off overall depends on how she values each.
Living standards include the goods and services people can buy and wider things such as health, leisure and the environment.
Material living standards are about the quantity and quality of goods and services people can consume.
Non-material living standards are about quality of life: health, leisure time, safety, stress and the quality of the environment.
The two can move in different directions. A higher-paying job can raise material living standards while longer hours and a longer commute lower non-material ones.
A full answer on living standards should look at both, and ask whose living standards are changing.
- Material
- Goods and services consumed.
- Non-material
- Health, leisure, environment, safety.
Worked example: Higher income, less time
A worker takes a better-paid job but now works six more hours a week and has a longer commute.
- Material: higher income, so the family can buy more.
- Non-material: less leisure and more stress.
- Whether they are better off overall depends on how they value the extra income against the lost time.
Watch out for this
If income rises, living standards must rise.
Income measures the material side. Health, leisure and the environment can get worse at the same time.
Check your understanding
Which is a non-material aspect of living standards?
- The number of cars people own, which shows how comfortable life is.
- Household spending on food, which keeps people healthy.
- The amount of leisure time people have.
Show the answer
The amount of leisure time people have.
Right. Leisure is part of quality of life, not something bought.