The concept of standard of living is a vague concept and it generally refers to the mode of living which is decided by the quantity of goods and quality of goods and services consumed by the average family of a particular group.
Everyone chooses to have certain goods and services and of these, there will be necessaries, comforts and luxuries of life. The quality and quantity of these goods consumed depend upon his income, his attitude towards living habits etc. Normally, when a person is accustomed to certain types of goods and services, he will not like to give them up and these goods and services become necessaries of life for him. If by any reason he has to give up these, he feels utterly miserable, i.e. he feels the pain.
Once the people are accustomed to a certain type of standard of living, they are willing to go to higher standard of living.
The following are some factors which affect the standard of living:
- Firstly, it depends upon the level of income of the people. There is a direct relation between the income and the standard of living which a person enjoys. Higher the income, larger the volume of goods and services which one can consume. On account of the facts as mentioned above, the standard of living of rich people is found to be generally higher than that of a poor man.
- Secondly, the standard of living depends upon the availability of goods and services in the country. When the money is not sufficient to procure goods and services, the money loses its value and there is no use for such money. During the periods of war, famine or scarcity, the standard of life drastically comes down even though the income of the people is found to be high;
- The standard of living depends upon the wisdom with which people spend their money income. When the money is spent in a careful, calculated and planned manner, meeting the necessaries, comforts and luxuries, in the order of preference, the standard of life would go up. On the other hand if it is spent haphazardly in a reckless manner, the return will be poor for the money spent resulting in lower standard of living.
- The governments of modern days are seriously inclined towards increasing the standard of living of the masses by increasing production and effectively distributing for the consumption of people. Planning and public expenditure are carried on for creating employment and income for the people. International trade is carried on vigorously to create export surpluses so as to have comfortable foreign exchange position, to make investment abroad and also to import goods necessary for development.