A standard of living is the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or a certain geographic area. The standard of living includes basic material factors such as income, gross domestic product (GDP), life expectancy, and economic opportunity. The standard of living is closely related to quality of life, which can also include factors such as economic and political stability, political and religious freedom, environmental quality, climate, and safety.
The standard of living is often used to compare geographic areas, such as the standard of living in the United States versus Canada, or the standard of living in St. Louis versus New York. The standard of living can also be used to compare distinct points in time.
For example, compared with a century ago, the standard of living in the United States has improved greatly. The same amount of work buys an increased quantity of goods, and items that were once luxuries, such as refrigerators and automobiles, are now widely available. Also, life expectancy has increased, and annual hours worked have decreased.
Standard of Living vs. Quality of Life
The terms standard of living and quality of life are often believed to mean the same. While they may overlap, there is a difference between the two. A standard of living generally refers to wealth, comfort, material goods and necessities of certain classes in certain areas—or more objective characteristics, whereas a quality of life is more subjective and intangible, such as personal liberty or environmental quality. Characteristics that make up a good quality of life for one person may not necessarily be the same for someone else.
A distinction is sometimes made between standard of living and standard of life. Standard of living refers to our usual scale of expenditure, the goods we consume and the services we enjoy, our attitudes and values. Standard of life is a much wider term. It refers to one’s ideals in life. It includes a person’s expenditure on his non-material requirements. “Simple living and high thinking” is a common axiom. “Simple living” hints at a low standard of living, but “high thinking” refers to a high standard of life. Mahatma Gandhi had a low standard of living but a high standard of life.
The following are the main factors on which the standard of living in a country depends:
Level of National Income or Output:
The fundamental reason for the differences in the levels of living between different countries is the difference in their levels of national income. The level of national income depends upon the total volume of production in the country. Those countries having higher national income or output enjoy a higher standard of living, while the countries having lower national income or output have a lower standard of living. The main reason why the standard of living is much higher in the U.S.A. than in India is that the level of national output in the U.S.A. is much higher than that in India.
Now the question arises:
Why do some countries produce more than others? This brings us to the question of levels of productivity.
Level of Productivity:
The total amount of goods and services which a country can produce, and hence the standard of living it can provide to its people, depends upon the levels of productivity in different branches of economic activity such as agriculture, industry, transport, etc. The higher the productivity per person engaged in agriculture, industry, etc., the higher will be the national output and the standard 01 living of the people. The difference in productivity is the major cause of differences in standards of living between different countries.
Terms of Trade:
Another factor which accounts for the differences in the levels of living between different countries is the rate of exchange between goods exported and goods imported. The rate of exchange between exports and imports is called the terms of trade. The terms of trade show how much of the goods a country imports can be obtained by a unit of the goods it exports. The terms of trade can be measured by taking the ratio of price-level of its exports to the price-level of its imports.
Size of Population:
Still another important factor which determines the standard of living of the people of a country is the size of its population. Given the total national income or output of a country, the greater the size of its population, the lower will be its average standard of living. It is the per capita income which determines the average standard of living in a country.
The per capita income of a country is determined by the total national income and the size of its population. Thus, the difference in the size of the population also accounts for the difference in the standards of living between people of different countries.
Distribution of National Income:
Another determinant of the standard of living of the people of a country is the distribution of national income among the population. If there is large inequality in the distribution of income, then the standard of living of a few rich people will be very high, while the standard of living of the masses of the people will be extremely low.
General Price Level:
Another factor determining the standard of living of a people is the general price level in the century. Given the national income, the standard of living of the people will be lower when the price at high and higher when the prices are low. Different price levels prevail in different counties. This also accounts for the differences in standards of living of the people between different countries. Other things being equal, if the price level in country A is higher than in B, the standard of living will be lower in A than in B.
Level of Education:
Another factor responsible for the differences in standards of living is the difference in the level of education. Educated people tend to have a higher standard of living than the uneducated. You cannot expect a higher living standard from the illiterate and ignorant people. Even if the illiterate and uneducated people happen to have large incomes, they would either hoard them or squander them in useless social ceremonies or by indulging in evil habits such as drinking, gambling, etc.
It is often hard to determine the standard of living years after divorce when the modification issue arises. It is also costly to then have to reconstruct the records and perform the analysis. The issues can be raised in a proceeding to modify support–but the better practice is to ensure that the issue is appropriately addressed before the case is settled or goes to trial – especially for the spouse who is ordered to make the payments and wants to keep the door open to reduce or terminate them.
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