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Absolute standard of living is a measure of how comfortable, well-fed, sheltered, healthy, convenient, and labor-free one's life is. Examples of a high absolute standard of living include abundant food, quality housing, modern medicine, automobiles, air conditioning, plumbing, electrification, etc. Absolute standards of living tend to be shared by people in an area, mainly because economies of scale make it easy to provide these goods to most once an area becomes prosperous enough for them to be available at all.
Relative standard of living is a measure of how well-off you are compared to your neighbor. In a word, status. It's not just for bragging rights, however. A good example is housing. Because land can be limited in quantity in an area, the ownership of land becomes somewhat zero sum barring innovations like cheap transportation and multistory building. In this case, relative wealth advantages can translate into deprivation for those who, while wealthy enough to afford to build a quality structure, cannot afford land. A more extreme example is when very wealthy interests capture a government and change the rules to benefit themselves. There is also a lot of psychology that having a low relative standard of living is demoralizing, even if globally you have a high absolute standard of living.
So which is more important, having a high absolute standard of living (relative to people in the past), or having a similar standard of living relative to your neighbor? I'm deliberately framing this as a tradeoff because by most accounts it is. Countries with high growth rates tend to have more inequality while countries with more equality tend to grow more slowly. I'm open to correction on this in a search for the elusive win-win.
Absolute standard of living is a measure of how comfortable, well-fed, sheltered, healthy, convenient, and labor-free one's life is. Examples of a high absolute standard of living include abundant food, quality housing, modern medicine, automobiles, air conditioning, plumbing, electrification, etc. Absolute standards of living tend to be shared by people in an area, mainly because economies of scale make it easy to provide these goods to most once an area becomes prosperous enough for them to be available at all.
Relative standard of living is a measure of how well-off you are compared to your neighbor. In a word, status. It's not just for bragging rights, however. A good example is housing. Because land can be limited in quantity in an area, the ownership of land becomes somewhat zero sum barring innovations like cheap transportation and multistory building. In this case, relative wealth advantages can translate into deprivation for those who, while wealthy enough to afford to build a quality structure, cannot afford land. A more extreme example is when very wealthy interests capture a government and change the rules to benefit themselves. There is also a lot of psychology that having a low relative standard of living is demoralizing, even if globally you have a high absolute standard of living.
So which is more important, having a high absolute standard of living (relative to people in the past), or having a similar standard of living relative to your neighbor? I'm deliberately framing this as a tradeoff because by most accounts it is. Countries with high growth rates tend to have more inequality while countries with more equality tend to grow more slowly. I'm open to correction on this in a search for the elusive win-win.
I'm going to say absolute standard of living, because absolute standard of living allows for health and wellness improvements. Ability to go to the dentist, good drinking water, primary and secondary education etc. allow for a person to have more healthy, quality hours in their life. People may not choose the path to a healthy life, but the option is there. Many Americans are unhealthy, but don't let the average overshadow that there's a pretty huge chunk of Americans that have substantially better health and wellness than their counterparts 100 years ago; lots of millennials will live to be to 100 fairly healthily.
On the flip side, relative standard of living is more psychological in nature. Income is measurable, wealth a little less so, because of intangibles. A house in the woods might be paradise for one person and misery for the next. I think a lot of the comparisons people make to others are comparisons to constructions of who they think "those people" to be rather than who "those people" really are. And comparisons happen when people aren't happy and they look at other people to why they aren't happy instead of diving into their own headspace to figure out underlying issues.
The middle path answer to me is to keep striving for absolute standard of living for 90% of the populace, I don't know if you could ever get the last 10% to have it without a lot of programs. Coupled with this, we need a more comprehensive culture centered around gratitude and appreciating the little things and less focus on consumerism, which is a driver of the relative standard of living mindset. The whole idea of luxury depends on exclusivity rather than being an absolute good experience.
This is just a little aspect of it, but if you look at Christian doctrine, historically a LOT of it had to do with separating wealth from happiness, that happiness is more than that. That doctrine seems to have disappeared from pulpits of protestant, particularly evangelical churches, where the focus has been on faith - relationship with self to God and society to God, rather than lifestyle - relationships with self to others or self to society.
On the flip side, relative standard of living is more psychological in nature. Income is measurable, wealth a little less so, because of intangibles. A house in the woods might be paradise for one person and misery for the next. I think a lot of the comparisons people make to others are comparisons to constructions of who they think "those people" to be rather than who "those people" really are. And comparisons happen when people aren't happy and they look at other people to why they aren't happy instead of diving into their own headspace to figure out underlying issues.
That's a very good point, that absolute standard of living is more easily measured than relative standard of living. It makes objective comparisons easier, but we have to be aware of Goodhart's Law. If all we are working towards is greater productivity growth, that can obscure a lot of underlying issues. For example, just because the despair of those who live shoulder to shoulder with those who have millions more than them in wealth is hard to measure, doesn't mean it doesn't exist.
Occasionally we hear that not even the Duke of Wellington or the first Baron Rothschild had access to anesthesia, antibiotics or a telephone. Rockefeller and Carnegie knew nothing of the internet. Infant mortality was worse among 18th century European kings, than among 21st century destitute peasants in Afghanistan. So in absolute terms nearly all of us are better off today.
But let's consider. If our society hasn't yet invented the telephone or the interstellar rocket, we are collectively poorer. None of us can be blamed for never having visited other solar systems, if interstellar rockets don't yet exist. But anyone can be blamed for not getting a good degree in college, a better job and earning more money... saving it and investing it well. In relative terms, how we do, is much ascribed to how hard we tried... how clever and perceptive we were, how dedicated and patient.
Relative wealth matters as scorecard and badge of achievement. It is, at least in Western society, regarded as a reflection of our character. Absolute wealth is in contrast more a statement of society itself. We have little control over it, as individuals.
Which should be the greater priority: absolute standard of living or relative standard of living?
It all depends on how many people the resources are divided by.
A USA with 200-250M will allow a higher standard than a USA with 340M can.
This is where we are now. Too many forks poised over that pie.
But at the lower population level... a higher absolute standard becomes feasible...
and for most solely by their own efforts. At the higher level... not even close.
Last edited by MrRational; 05-22-2022 at 04:52 AM..
I would say absolute standard of living is the most important, but both are important.
Absolute standard of living, because it is absolute metrics that directly fulfil our most fundamental physical needs. A high absolute standard living gives one a safe and comfortable house, food to eat, medicine, etc. It is better to have 3 average meals even if you neighbour is having 7 decadent meals, than both of you have 2 poor meals a day.
However relative standard of living also matters for a couple of reasons:
- Dignity. Even if people have a good absolute standard of living, if they think they are far away at the bottom of the social hierarchy, that makes them feel like the society doesn't value them. And societal unrest and division ensures.
- Fairness. The principle of fairness is fundamental to humans. When people perceive the difference in relative standard of living is not a fair difference, then resentment builds. Note that what is "fair" is somewhat subjective, so not all inequality will cause resentment. My best description of "fairness" in this case is where the higher relative standard of living is proportional to the value (not just monetary) that person has added to society, and "unfairness" is where the higher relative standard of living is greater than the value the person has added to society.
Given that material wealth won’t make us taller or raise our IQ, arguably the main point of wealth is to have a claim over other people’s labor. More than just status, wealth accords us capacity to boss people around. If I walk into somebody’s house and demand food, perhaps I’ll receive it out of charity. Or I’ll get shot. But there is a way to exchange money for food: a restaurant. I walk in, under presumption of having means to pay. I get served, eat, and then… pay. The food is exchanged for money, regardless of whether I’m personally acquainted with the proprietor, or whether I’m a nice person, or my nationality or appearance. Money is literally the currency of commerce. It compels the waiter to bring the food and the cook to prepare it. These persons aren’t literally my slaves, of course. But my offering money for their services is a claim on their labor, not unlike that of master over slave.
If all of us are rich, then depending on society’s technological development, we can all afford fresh vegetables, or supercomputers, or space-travel by wormhole machines (suppose). We live better. But none of us has comparatively higher claim over another’s labor. Wealth just becomes a means to an end, that end being to eat better or to be healthier or to travel faster. We lose that delicious pleasure of getting others to do our bidding. That’s a pleasure enjoyed by ancient priests and nobles, who were vulnerable to vitamin deficiency, dysentery and an early death, but who wielded tremendous power over vast number of people.
Simply put, I’d rather have a swarm of servants standing around my couch, rhythmically fanning me with palm-leaves, sitting in a stone palace in the stifling sun of Egypt or in a tent in Arabia, than to have a quiet and efficient modern air conditioning system, in a modern American suburb.
Absolute standard of living is a measure of how comfortable, well-fed, sheltered, healthy, convenient, and labor-free one's life is. Examples of a high absolute standard of living include abundant food, quality housing, modern medicine, automobiles, air conditioning, plumbing, electrification, etc. Absolute standards of living tend to be shared by people in an area, mainly because economies of scale make it easy to provide these goods to most once an area becomes prosperous enough for them to be available at all.
Relative standard of living is a measure of how well-off you are compared to your neighbor. In a word, status. It's not just for bragging rights, however. A good example is housing. Because land can be limited in quantity in an area, the ownership of land becomes somewhat zero sum barring innovations like cheap transportation and multistory building. In this case, relative wealth advantages can translate into deprivation for those who, while wealthy enough to afford to build a quality structure, cannot afford land. A more extreme example is when very wealthy interests capture a government and change the rules to benefit themselves. There is also a lot of psychology that having a low relative standard of living is demoralizing, even if globally you have a high absolute standard of living.
So which is more important, having a high absolute standard of living (relative to people in the past), or having a similar standard of living relative to your neighbor? I'm deliberately framing this as a tradeoff because by most accounts it is. Countries with high growth rates tend to have more inequality while countries with more equality tend to grow more slowly. I'm open to correction on this in a search for the elusive win-win.
This is a very good question and in my view the answer vastly depends on specific context .
For instance when it comes to determining whether a country is developed or not , it is the absolute sense of standard of living that matters , since no country where the majority of the population isn't going hungry or thirsty/has electricity and indoor plumbing in the dwellings they reside in/has access to the Internet and mobile phones can be reasonably described as non developed .
On the other hand relative standard of living matters a lot when it comes to political/societal issues related to differences between different regions such as ( to use a good example ) the Western and Eastern parts of the contemporary EU , since there is still a wide gap ( especially in perception ) between the relative standard of living which exists in the two respective regions .
All that typed to give a specific answer to your query , I'm of the mind that it is the absolute standard of living which matters most since it really matters not how well your neighbor lives compared to you if you're doing good IMHO , however since the perception of such differences can have a rather negative effect on sociopolitical phenomena it is also pertinent that measures be made to close the gap in certain cases .
It's interesting that the replies thus far weighing the importance of relative standard of living have mostly focused on the psychological aspects of it, e.g. "I feel dejected because I'm poorer."
I also raised the prospect that inequality in relative standard of living can actually work against the spread of absolute standard of living. In my real estate example, expensive land can actually produce more absolute deprivation of shelter. In other words, if a medieval landlord owns all the land for miles and can collect enough rents to maintain his holdings, that will immiserate the people living near him. There is the even greater problem that this wealthy landlord can capture the local government and outlaw, for example, peasants' ability to flee his land for better opportunities.
All that is to say there is a limit to the amount of inequality that can be tolerated before the inequality becomes self-reinforcing and lowers the absolute standard of living of others.
I also raised the prospect that inequality in relative standard of living can ...
... can be traced to a consistent cause: Lack of Cash to afford X or Y or Z...
The emotional aspect is when the realization that their situation isn't likely to ever change hits.
An existential crisis when they realize there really is no place for them to grow (earn) into the higher levels...
and they can't see a way for them to afford (earn) even the lowest level of living standards.
Quote:
All that is to say there is a limit to the amount of inequality that can be tolerated ...
I don't see any evidence of that. If anything I see the opposite:
an almost gleeful willingness by so many to perpetuate the underlying issues.
I'll frequently mention the largest common denominators at the root of the their lack of cash --
1) competition for jobs and 2) suppressed wages (to afford X, Y, Z on their own)...
being directly caused by having too many people (100M in the US alone) ...
let alone their impacts on natural resources and civil infrastructure...
The responses range from the pseudo-intellectual statistician types who like to forecast
a possible remedy BEGINNING a 100 years off to those who want to pack and stack the excess...
mixed in with the welfare state types supporting alternate income structures (eg UBI) to "make up the difference".
Last edited by MrRational; 05-30-2022 at 05:15 AM..
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