The Economics of Consumption

By Charles S. Wyand | Go to book overview

CHAPTER 18
NORMS OF LIVING

At times it becomes desirable to carry the analysis of family outlays beyond the point of determining the nature of prevailing levels and standards of living. Thus, in attempts at wage rate negotiation, it has been found unwise to follow too closely the findings of either of the above types of studies. For, the average level of living is inadequate to insure health and decency, and the average standard of living frequently includes many things that are unessential for well-being or that are positively harmful to the consumer, albeit profitable to the producer. Therefore, if it is desired to establish a "fair" wage in terms of human welfare,1 an answer must first be had to the query, "What does it cost to live decently but with maximum economy?"

A reasonably accurate reply to this question involves the solution of one of the most difficult problems in economics. For, to insure human welfare, more than a mechanical evaluation of physical and physiological needs is required. Difficult as it is to do, a selection of products must be made in terms of the individual's psychic, physical, social, and economic condition. The problem thus becomes complex and ramified and involves the application of a vast amount of technical information tempered by reasonably deep insight into human motives and their operation. Where attempted, however, the product of such an analysis would be a norm of living or, in other words, an ideal configuration of utilities designed to maintain a specified level of living at minimum cost. It is thus a choice pattern or budget which attempts to indicate how a given income should be utilized to yield maximum welfare. As such, it seeks to discover what men want most, what relation their desires bear to their needs, and how they may insure the most effective use of purchasing power. The norm thus depicts what the family as an economic unit ought to consume, and

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1
Notice that a fair wage in terms of the productivity of labor might be drastically different from a fair wage in terms of the workers' needs. Budget studies conventionally seek only the determination of the cost of maintaining health (and in some cams) decency.

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