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.
KeywordsBlack Market Methodological Basis Price Parity Saving Bank Price Ratio
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Notes and References
- 1.This and the following chapter play a service role. They are primarily for readers who are little acquainted with the problem being discussed. I do not pretend to offer any original opinions here. Moreover, I simplify a number of things and do not speak of the debates and disagreements that are abundant in the special literature. Incidentally, quite a lot has been published in Russian on the methodology of international comparisons, especially on comparisons within ‘the socialist camp’. One such work is O. K. Rybakov, Metodologiya sravneniya ekonomischeskikh pokazateley sir an sotsializma, M., 1968.Google Scholar
- 11.It is described in a relatively old work — Milton Gilbert and Irving B. Kravis, An International comparison of National Products and the Purchasing power of Currencies, Paris 1954. Our authors refer to it as their methodological foundation. The book was translated into Russian: Mezhdunarodnoye sravneniye natsional’nogo produkta i urovnya tsen, M., 1962. The method is not the only one, but it is the most widespread and known.Google Scholar
- 22.Irving B. Kravis, Zoltan Kenessey et al., A System of International Comparisons of Gross Product and Purchasing Power, 1975, p. 19.Google Scholar