Are living standards in jeopardy? Will future generations attain levels of well-being that are comparable to those of their parents and grandparents? There is little debate over the fact that the United States enjoys one of the highest standards of living in the world. The absence of growth in real median family income over the past thirty years, however, has prompted concern for future prospects.

The results presented in this chapter suggest that this concern is unwarranted. The data do not support the claim that the standard of living has been stagnant or falling. Consumption-based estimates of social welfare have increased substantially since 1970 and, in fact, show a rate of growth that approaches the postwar average. Although there were occasional declines from one year to the next, the longrun trend was upward, and this qualitative finding is robust across alternative measures of the standard of living.

HOUSEHOLD NEEDS AND EQUIVALENCE SCALES

Since my measure of social welfare is based on the average level of consumption per equivalent adult, accurate estimates of the consumption requirements of households are essential. Although there is debate as to what such estimates represent, virtually every measure of social welfare uses one. If living standards are reported on a per household basis, needs are assumed to be the same regardless of household composition. If welfare is measured in per capita terms, needs are assumed to increase linearly with the number of persons sharing resources.