Econ Class 18

Living Standards

• The living standard of a population is measured in two ways: material living standards and non-material living standards.
• Material Standards measures quality and quantity of goods and services for each person in an economy
  • We have to consider the availability of goods and services (are they accessible?)
  • Measured by real GDP. GDP measures the stuff we've got.
  • Material living standards refer to our access to physical goods and services.
  • The car we drive, the house we live in and the food we eat are all examples of physical possessions that contribute to our material living standards.
  • The material living standards of a nation are usually accessed or measured by the quantity of goods and services available each year as measured by , for example, GDP.
  • Many would agree that if the citizens of a country have access to more goods and services to satisfy their needs and wants, life is generally better.
  • Moreover, producing goods and services provides citizens with employment, and therefore an income to buy goods and services that improve their lives.
• Non-material Standards measure intangibles, focusing on quality of life
  • The dimensions measured are usually life expectancy, literacy, rate, leisure hours, etc.
  • Non-material living standards must also be considered when assessing the quality of life.
  • Non-material living standards cannot be measured in dollar terms, and are intangible, but affect our enjoyment of life.
  • Non-material living standards are hard to measure.
    • We have some indicators, however, such as the OECD Better Life Index.

Examples of Material standards of living

• Income
• Housing
• Access to amenities
  • Public transport
  • Water
  • Electricity

Examples of Non-material standards of living

• Environment
• Leisure time
• Work life balance
• Political freedoms

More factors:

• Freedom of speech - such as being able to peacefully protest against the government of the day
• Free elections - that provide the right to choose and dismiss parliamentary representatives
• Low levels of crime and discrimination - where citizens can live without fear of constant crime or being treated differently because off actors such as race, disability or age.
• Preservation of the environment - allowing citizens to enjoy nature, breathe clean air and drink clean water
• Adequate leisure time - so that employment have adequate rest periods away from work and time to spend with family

Effect of living standards in the real world:

• China has focused primarily on the material standard of living when progressing their economy.

Important questions about living standards:

• What happens when basic living standards are not met?

• What are basic needs that would ensure an acceptable standard of living for an individual in society?

• What are some benchmarks that allow us to ascertain if living standards are met

• Are material needs more important than non-material needs?

• How has Australia fared over the years?

Poverty

• Poverty can be defined as the state in which an individual or household is not able to fulfil minimum consumption needs.
• It is not always about money, but it also entails access to basic facilities such as proper hygiene, sanitation, food, shelter, drinking water, health, education, transport, whose absence as a whole, is regarded as poverty.
• It can be absolute poverty or relative poverty. Absolute poverty is when there is an absence of a minimum level of subsistence needed for the basic well being.

Absolute poverty

• Cannot meet the basic necessities of life
  • Sanitation, medical care, education, food
• We compare the income of a household with the standard minimum income of the household within an economy.
• This standard is different depending on the country.

Relative poverty

• Someone who lacks the least amount of income required to maintain the normal standard of living, in the society to which they belong.
  • For example they may not have access to housing
• They are relatively poor compared to other members of society.
• The word relative means in comparison to, so we define poverty concern the overall distribution of income to another person/family/country.
• We either compare members of a country, or we compare countries with countries.

Housing

• Housing is fundamental to all Australians and our housing market has a significant influence on a number of key social and economic aspects of society.
• It plays a major role in the health and wellbeing of Australians, by providing shelter, safety, security and privacy.
• The availability of affordable, sustainable and appropriate housing enables people to participate in the social, economic and community aspects of their lives.
• From a social perspective, housing provides a stable base from which we can participate in society, form families, and enjoy retirement. Housing can determine lifetime education, employment and health outcomes.
• From an economic perspective, housing has a significant impact upon investment, productivity and participation, as well as consumption and saving trends across the economy.

Housing security

• What happens when our society cannot maintain affordable housing?
• A lot of bad consequences.
• The absence of affordable, secure and appropriate housing can result in homelessness, poor health and lower rates of employment and education.

Homelessness

• People experiencing homelessness include those who sleep rough on the streets or under makeshift dwellings.
• Although people who sleep rough are most visible to the public, they only represent 7% of homelessness in Australia.
• Homelessness can also include individuals and families moving between temporary shelters, including housing of friends, family and emergency acommodation.
• The legal definition is different for every country.
• People who are homeless are most often unable to acquire and maintain regular, safe, secure and adequate housing due to an unsteady or lack of income.
• Homelessness and poverty are interrelated.
  • It is difficult to get a job, if you lack a stable environment to apply for jobs.
• In general, there is no methodological consent on counting the homeless and identifying their special needs, thus in most cities only estimated homeless populations are know.

The poverty line

• Poverty line is often discussed in relation to poverty, which means an estimated minimum household income threshold, which is required to fulfil the basic necessities of life.
• Any person or family below this threshold is identified as poor.

What is income:

• Income is money that an individual or business receives, usually from exchanging by providing a good or service through investing capital.
• Investments, pensions, and forms of welfare payment are primary sources of income for retirees.
• For individuals, income is most often received in the form of wages or salary.
• Business income can refer to a company's remaining revenues after paying all expenses and taxes. In this case, income is referred to as "earnings". Most forms of income are subject to taxation

What affects income?

• Personal incomes:
  • Economic/social/political conditions
  • Education
  • Experience
  • etc.
• Business incomes:
  • Economic climate
  • Factors of Production cost?

Lesson Tasks:

• Look at different types of housing in Australia, and find how much is available (private, rental, public)

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