American Standards of Living: 1918-1988.

Many individuals have contributed to the development of devices to measure an economic system's progress over time. One such device is the National Income and Product Accounts pioneered by Simon Kuznets in the United States and Sir Richard Stone in the United Kingdom. Another is the Human Development Report compiled by the United Nations Development Programme. A third, The Standard of Living Index, is developed by Brown in American Standards of Living. The measures of economic progress developed by Kuznets, Stone and the Development Programme are macroeconomic in scope and do not provide a clear picture of the events affecting a nation's social classes, a point which Kuznets made in National Income 1929-1932 [2, 5-8]. Brown's theory examines the expenditure pattern of America's social classes and provides a unique look at the transformation of America's social classes during the years 1918-1988.(1)

The Standard of Living Index developed by Brown for the years 1918, 1935, 1950, 1973 and 1988 has three principal categories, the consumption category, the income category, and the needs category. The subcategories of the consumption category include: food, clothing, rent (which is replaced by housing in 1950), fuel and light (which is combined with housing in 1973), furnishings, transportation, recreation and education, household operation, medical care, personal care, gifts and contributions, personal insurance, and other. The income category bas four classes: salaried persons, wager earners, laborers and individuals who are poor and/or members of the underclass. These four income classes correspond roughly to the five quintiles used by the Bureau of the Census in depicting the distribution of income in this nation.

The needs category bas three subcategories: basic needs, variety needs, and status needs and three dynamic factors: emulation, innovation and dis-emulation. Basic items are designed" . . . to meet fundamental physical needs and minimum requirements for social integration" [p. 3]. Having satisfied theft basic needs, individuals spend a portion of their income to meet the needs of variety and status. Variety refers to the desire to have a greater diversity of various types of commodities - six business suits of different colors and cuts for example; whereas status refers to the desire for differentiation - a Lexus rather than a Corolla. "This enables us to distinguish between improvement in the standard of living that reflects more of the same goods (variety), versus improvement that reflects the purchase of higher-priced goods (status) [p. 4].

Three dynamic factors affect the needs category. The first factor, emulation, refers to the process where as individuals' incomes rise and they move into a higher income bracket they emulate the purchasing patterns of individuals who comprise this higher income bracket: they stop wearing sneakers and start wearing Rockport deck shoes because that is what the members of the new income class wears. The remaining two factors, innovation and dis-emulation, refer to breaks with or departures from consumption patterns which a particular income class bad in the past. As individuals' incomes rise and they move into a higher income class the purchase of a more sophisticated record player would be an example of emulation and status purchasing; but the acquisition of a compact disc player would be an example of innovation and status purchasing.

Of the many questions which Brown addresses in this study three are of interest. First, to what extent, if any, has the ability of America's social classes to purchase the basic needs increased from 1918 to 1988? Brown's Index shows that as the level of income has increased in real terms the ability of America's social classes to purchase the basic needs has increased dramatically. Indeed, as one peruses the The Standard of Living Index tables this particular conclusion "jumps out" at the reader. Second, to what extent, if any, is the economic equality of America's social classes - as measured by patterns of consumption - affected by periods of economic expansion and contraction? Brown's Index shows that economic equality is higher during periods of economic expansion; but as the supply of variety and status goods increased, the desire for social differentiation in terms of patterns of income expenditures tends to increase during periods of economic contraction. Thus, during the early part of this century, given the distribution of income, the dominant purchasing pattern was that of emulation and basic; but as technological change became more rapid and incomes increase dramatically in real terms the income expenditure pattern changed to innovation, variety and status. Third, to what extent, if any, is the economic equality of America's social classes - as measured by patterns of consumption - affected by the unrealistic expectations developed between 1950 and 1973? Brown's Index shows that the years 1950-1973 were a remarkable chapter in the economic history of America, remarkable in two ways. First, the increased ability of a large segment of the population to meet its basic needs and to devote increasingly larger portions of its disposable income to purchase goods in the variety and status categories led to unrealistic expectations about the future. Second, the rapid expansion of the social welfare programs reduced the economic distance between the working poor (some of the wage earners and all of the laborers) and welfare recipients with the result that when the economy began to slowdown and the unrealistic expectations of the 1950-1973 period were not met tension between the social classes at the lower end of the income scale increased dramatically.

This is an excellent piece of research. Brown provides us with a very different look at an important period of American economic history. I recommend this work to those of you who are interested in this aspect of economic research and American history.

Tom Cate Northern Kentucky University 

1. Brown's book bears a family resemblance to Braudel's The Structures of Everyday Life [1] and Smith's The Rise of Industrial America [3]. In Structures, Braudel examines the ability of the social classes of Western Europe during the 15th to 18th centuries to purchase the basic needs of everyday life. Given the data set with which he worked Braudel was unable to construct an index that is strictly comparable to Brown's. In Industrial America, Smith examines the impact that industrialization had on the social classes of America with particular attention being paid to the "common person" and minorities. Smith does not attempt to construct an index but rather uses anecdotal evidence to persuade the reader that purchasing the basic needs was a difficult task. Brown's index demonstrates empirically the difficulty of that task.

References

1. Braudel, Fernand. The Structures of Everyday Life, vol. 1 of Civilization & Capitalism 15th-18th Century. Paris: Librarie Armand Colin, 1979; translated from the French and revised by Sian Reynolds, New York: Harper & Row, 1981.

2. Kuznets, Simon. National Income 1929-1932. Washington, D.C.: U.S. Government Printing Office, 1934.

3. Smith, Page. The Rise of Industrial America, vol. 6 of A People's History of the Post-Reconstruction Era. New York: Penguin, 1984.