Biological standard of living

The Biological Standard of Living indicates how well the human organism itself thrives in its socio-economic and epidemiological environment. It captures the biologically relevant component of welfare, well-being or the quality of life. It emphasizes that the human experience ought not to be thought of in one dimension: well-being encompasses more than the command over goods and services. Health in general, including the frequency and duration of sickness, and longevity, has a contribution to welfare - independent of income. The biological standard of living is proxied by such indicators as longevity, morbidity and frequently by the physical stature of a population. The latter is relatively easily measured, and correlates positively with health outcomes until about a mean of 185 cm for men and 170 cm for women.

Individual income
In many ways, such indexes provide a more nuanced view of a society's welfare for comparative purposes than income by itself. The analysis of welfare, a fundamental concept in economics and arguably an important concept in other social science disciplines as well, should be considered multidimensional, rather than merely equating it with money income, the conventional view of the standard of living. The impetus for the more nuanced formulation of well-being was not only the innumerable conceptual weaknesses of the conventional standard of living, such as the difficulties in adding up ‘utility’ or welfare across households, or of populations over time, but was prompted also by lack of reliable data on income for long historical periods, as well as the absence of data sufficiently disaggregated spatially, socially, by gender, or by age. How would one determine the welfare of inhabitants of Soweto, for instance, where a substantial portion of the inhabitants live from the informal economy without reporting it to a statistical institution? In a historical context the same can be said of self-sufficient peasants, housewives and of slaves.

Furthermore, problems surface even in advanced economies where nominal income data are available at a spatially disaggregated level, but its conversion into real income is thorny in the absence of accurate price index at the local level. In addition, income ought not be equated with utility or welfare insofar as it does not take into account the disutility or pain of acquiring that income and also disregards interdependent utility functions, i.e., that the subjective evaluation of one’s welfare occurs not in absolute terms as is assumed, but relative to that of other members of the peer group. This tends to be less the case for biological well-being, as we do not evaluate our own toothache in terms of that of others. The emblematic concept in economics, namely individual utility maximization subject to an income constraint, is also problematic from the point of view of measuring welfare, insofar as only a minority earns income in any society, while the remainder are essentially dependent in some sense. In the United States, for example, 54 per cent of the population earned income in 2003, but only 36 per cent were employed full time throughout the year. Hence, the discrepancy between income and welfare becomes salient, particularly for minors and those (mostly females) who work in the household. Moreover, lifetime health is determined for the most part in childhood, hence by parents, and not by the individual children themselves, and the distribution of resources within the family is quite ambiguous. These allocation decisions early in life cannot be reversed in most cases, particularly since markets do not exist for most aspects of health. Trade in human organs is prohibited, and hence prices (or future prices) do not exist for components of health, even if some forms of insurance do exist. Moreover, the acquisition of knowledge of the determinants of health outcomes is costly, and consequently consumers’ information set is incomplete and fraught with uncertainty. In short, children have no income of their own, and even if they did would not be able to determine their lifetime health.

National income
National Income also has the disadvantage of not being adjusted for income distribution, or for the generation of negative externalities such as pollution, congestion, crime, wars, natural disasters, noise, or for the potential additional risks to survival of the species brought about by global warming, for instance. In dictatorial societies economic data are notoriously unreliable, while accurate information on other aspects of welfare might be available. Comparison of income across different economic systems is also challenging because of the difficulties associated with implementing the measurement of economic concepts under widely diverging structures of entitlements and capabilities. Thus, while undoubtedly useful in many ways, GDP per capita or personal income or wages are regarded by many scholars as a perfunctory measure of welfare.

Origin
Thus, the concept of the biological standard of living was introduced into the literature by John Komlos in 1989.