How should we measure living standards in the UK?

Dr Demi Patsios, Senior Lecturer in the Centre for Research in Health and Social Care, discusses findings from a recent Nuffield Foundation project that examines the importance of using multidimensional indicators to improve the measurement of living standards.

Living standards in the United Kingdom are typically measured using household income or expenditure. Past research focuses on how they have changed over time, the extent to which there are in inequalities within different groups, and the impact of the recession on living standards Subjective indicators such as the personal evaluation of life circumstances, have however often been neglected or dismissed in social policy research as unreliable.

There has been little research that combines monetary and non-monetary indicators to inform living standards in the UK, both objectively and subjectively measured, for different household compositions and family types. Combining information on material and social living standards with how people feel about different aspects of their lives provide both a fuller picture on how different family types are faring in society and a broader picture of well-being, which can be used by policymakers to improve welfare and redress inequalities.

Our project The distribution and dynamics of economic and social well-being in the UK used data from three UK national surveys

  • Poverty and Social Exclusion Survey (PSE) 2012
  • Family Resources Survey (FRS) 2006/7 – 2016/16
  • UK Household Longitudinal Study – “Understanding Society” (USoc) 2009-11 – 14-16

In our research, living standards are defined as the total of individual/family welfare using both objective and subjective indicators of individual/family welfare, which fall under three broad domains: ‘What We Have, ‘What We Do’ and ‘Where We Live’. This conceptual framework was originally applied to the 2012 Poverty and Social Exclusion survey (PSE2012) data

What We Have

  1. Economic resources
  2. Material good
  3. Financial situation
  4. Personal and social resources
  5. Physical and mental health

What We Do

  1. Paid and unpaid work
  2. Social and political participation
  3. Social relations and integration

Where We Live

  1. Housing and accommodation
  2. Local area/neighbourhood
  3. Local services

Key project findings

  • The research confirms previous research that certain family life-course types, e.g. single adults of working age and single parents, had been affected most (monetarily and non-monetarily) by the economic downturn and subsequent recovery.
  • The same family life-course type differences and trends across the recessionary period are found in both objective and subjective indicators of resources (e.g. income, financial situation and mental health).
  • The analysis showed the importance of the nature of the measures and indicators used when trying to establish changes in trends in both objective and subjective indicators and the relationship between them over time.
  • The associations between objective and subjective indicators of economic resources are most closely aligned when individual measures or indicators of living standards are highly congruent in both measurement and operationalisation.
  • The findings also confirmed the importance of income as a key resource in living standards and the scientific validity of material deprivation items used in PSE, FRS and USoc surveys.
  • Satisfaction with income, satisfaction with financial situation, and satisfaction with life can be used as valid and reliable subjective indicators of living standards and how they change over time.

So why use subjective indicators of living standards?

Our research shows that a small set of subjective indicators (satisfaction with income, satisfaction with financial situation, and satisfaction with life) can be used to monitor changes in living standards over time and between different household and family types.

Subjective indicators can corroborate objective indicators such as income and material deprivation, which are not collected consistently across surveys or over time. These could be useful for smaller charitable and voluntary organisations working with individuals and families who do not have the capacity to collect in-depth survey data on income/resources.

Subjective indicators can help track changes in living standards across time and across family life-course types because their variation is explained mostly by what people have rather than who they are, where they live and what they do. By going beyond objective indicators of resources, we can capture a fuller and more nuanced picture of living standards in the in order to identify groups (specifically, single adults of working age and single parents) that require further policy attention (monetary and non-monetary), particularly during periods of economic downturn.

Find out more about the project.

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