Social deterioration must be factored into calculations of living standards.

Over the last few centuries there has been an enormous increase in living standards brought about by economic growth. No serious person denies that the average person today has a higher standard of living than the average person 100 years ago. People today have appliances that didn’t exist in 1900, we can expect to live longer, and modern medicine greatly reduces our suffering from injury and illness. The average American lives in a climate controlled house that is huge by the standards of 1900.

In addition to the economic changes, over the last 100 years there have been huge social changes, many of them for the worse.

Fatherlessness

To take just one example the rate of out of wedlock birth has risen dramatically. In 1929 the rate was less than 5%. Today it is 40%. Growing up without a father is a serious harm to a child. It is a harm which is plausibly worth a substantial percentage of lifetime income.

Out of wedlock childbirth rates | Heritage Foundation

Let us suppose that the value of growing up with a father is 10% of lifetime income. In order to calculate real living standards, we need to combine the raw GDP statistics with the change in the rate of fatherlessness. Let’s take 1950 as the starting point because the 1950s are sometimes viewed as the Halcyon days before modern liberal social changes.

Since 1950, real GDP per capita has increased from $15,559 (2017 dollars) to $69,359 (2017 dollars). Over the same period, fatherlessness (as measured by out of wedlock birth) has increased from 4% to 40%. Putting the value of having a father at 10% of lifetime income, real living standards including fatherlessness are given by:

Real living standard = Raw real gdp * (1 - %fatherless) + Raw real gdp * (1 - 10%) * %fatherless

1950: $15,559 * (1 - 4%) + $15,559 * (1 - 10%) * 4% = $15,497

2024: $69,359 * (1 - 40%) + $69,359 * (1 - 10%) * 40% = $66,585

From 1950 to 2024 there has been 345% growth since 1950 in raw real gdp per capita.

When adjusted for the rise in fatherlessness there has been 330% growth since 1950.

If you don’t agree with my 10% figure, you can put in your own estimate in this spreadsheet.

Since single parents are usually less happy than married parents, we might also want to include the reduction in the mother’s happiness in this calculation.

Obesity

Obesity seriously lowers one’s romantic prospects, ability to enjoy physical activities, and general enjoyment of life. It is plausible that being obese rather than healthy is equivalent to a 20% reduction in income.

In 1950 the obesity rate for American adults was about 10%. Today it is about 40%. If we incorporate obesity into the calculation of living standards we get:

Real living standard = Raw real gdp * (1 - %obese) + Raw real gdp * (1 - 20%) * %obese

1950: $15,559 * (1 - 10%) + $15,559 * (1 - 20%) * 10% = $15,248

2024: $69,359 * (1 - 40%) + $69,359 * (1 - 20%) * 40% = $63,810

From 1950 to 2024 there has been 345% growth since 1950 in raw real gdp per capita.

When adjusted for the rise in obesity there has been 318% growth since 1950.

Community

When my grandmother was a child, her small Illinois town held an ice cream social event for the whole community every Saturday. The women of the different churches in town would take turns organizing it. Those kinds of community ties have weakened over the last several decades. I’m not aware of any statistic that fully encapsulates the decline of American community, but a good proxy might be the number of close friends that people say they have.

According to the American Perspectives Survey, Americans report having fewer close friends than they did in the past. We only have data back to 1990, but we see that over that period the number of people who have no close friends has increased four fold from 3% to 12%. The number of people who have five or more close friends has decreased from 63% to 38%.

The Amish Rumspringa

Economists say that the value of a thing is determined by whether people choose to purchase it, and the price at which they choose to purchase it. In order to prove that modern living standards are much higher than the living standards of the 19th century, it would be useful to use a time machine to take people from the 19th century, let them experience modern life for a while, and then give them the choice to spend the rest of their life either in the 19th century or the 21st century. We don’t have a time machine, but we do have a similar experiment.

The Amish have a custom in which young people are given the opportunity to experience the outside world before they decide whether or not they will be baptized and remain part of the Amish community. Amish youth are aware of modern technology and conveniences, but most choose to remain in the Amish lifestyle.

As I see it, the economist can offer only one reason why most Amish children choose to remain Amish: they don’t want to leave their friends, family and community behind, even though the material comforts of the modern standard of living are better.

But if friends, family and community bonds are so valuable that they outweigh so much material comfort, then that must mean that the lack of friends, family and community in modern American life must negate a large amount of material and technological prosperity when living standards are calculated.

I’m not saying that Rummspringa shows that progress is fake or that 19th century living standards are just as good as 21st century ones. Rummspringa is not a perfect experiment because everyone who does it grew up Amish. Almost no non-Amish people go to join the Amish community. What I am saying is that family, friends and community must be a huge component of real living standards. They are worth a large double-digit percentage of lifetime income.

Potential Living Standards vs. Actual Living Standards

Here’s one response one might give to the above points about single motherhood and obesity: those things are the result of personal choices. One can easily choose to not become a single mother and not become obese.

But that response misses the point of GDP statistics. We calculate a country’s actual GDP per capita, not the GDP per capita which they could have if people made more prudent choices.

Conclusion

When one conflates GDP with standard of living and ignores social ills such as single motherhood, obesity, and lack of community, one conflates potential living standards with actual living standards.

With the abundance of modern production and technology, you can choose to save your money, wait until marriage to have children, abstain from drugs, and (assuming you clear the not insignificant hurdle of finding a spouse who is equally prudent) you can have a high standard of living. But if you make less prudent choices you will in fact end up with a much lower standard of living. To get a realistic measure of standards of living we must discount the GDP figures to account for some of the social changes which have taken place over the last several decades.