Methodological Basis

The concept of standard of living itself must be defined first — a lot depends on one’s point of view, on a country’s cultural traditions — no objective truth exists here.1 Clearly this standard is largely determined by the quantity and quality of food, clothing, various services, and by the size and comfort of housing. But it is somewhat less clear with respect to entertainment and sport — recreation in general. Rejuvenating relaxation is an important element of the standard of living, but without a concrete statement of what it is, one might conclude that the unemployed live better than everyone else.2 Therefore, the assumption is made that entertainment, sport, and recreation can be measured by expenditures on them, i.e., other things being equal, the more we spend for these pursuits, the better we live. Including health and education in the standard of living is no less questionable,3 but it is intuitively clear that, again, other things being equal, by spending more on universities, schools, and hospitals, people live better. Be that as it may, all these are components of consumption, and it is the total expenditures for consumption that characterises the standard of living.