Measuring Standards of Living

Measuring standards of living is the process of assessing the level of economic welfare and consumer satisfaction, strictly in terms of economic well-being, of a given economic context. The standard of living determines a household's or a consumer's ability to purchase goods and services from which utility is then derived in a certain time or place. The term refers specifically to the economic component of utility, hence excluding any other impact the good has on well-being. For instance, the availability of sun impacts the standard of living to the extent that good weather is consumed (e.g., with more leisure activity), but it does not include the impact of sun on other aspects of the utility function (e.g., the psychological or health benefit deriving from it, ...