A History of the Standard of Living in the United States

Richard H. Steckel, Ohio State University

Methods of Measuring the Standard of Living

During many years of teaching, I have introduced the topic of the standard of living by asking students to pretend that they would be born again to unknown (random) parents in a country they could choose based on three of its characteristics.  The list put forward in the classroom invariably includes many of the categories usually suggested by scholars who have studied the standard of living over the centuries:  access to material goods and services; health; socio-economic fluidity; education; inequality; the extent of political and religious freedom; and climate.  Thus, there is little disagreement among people, whether newcomers or professionals, on the relevant categories of social performance.

Components and Weights 

Significant differences of opinion emerge, both among students and research specialists, on the precise measures to be used within each category and on the weights or relative importance that should be attached to each.  There are numerous ways to measure health, for example, with some approaches emphasizing length of life while other people give high priority to morbidity (illness or disability) or to yet other aspects of health quality of life while living (e.g. physical fitness).  Conceivably one might attempt comparisons using all feasible measures, but this is expensive and time-consuming and in any event, many good measures within categories are often highly correlated.

Weighting the various components is the most contentious issue in any attempt to summarize the standard of living, or otherwise compress diverse measures into a single number.  Some people give high priority to income, for example, while others claim that health is most important.  Economists and other social scientists recognize that tastes or preferences are individualistic and diverse, and following this logic to the extreme, one might argue that all interpersonal comparisons are invalid.  On the other hand, there are general tendencies in preferences.  Every class that I have taught has emphasized the importance of income and health, and for this reason I discuss historical evidence on these measures. 

Material Aspects of the Standard of Living

Gross Domestic Product

The most widely used measure of the material standard of living is Gross Domestic Product (GDP) per capita, adjusted for changes in the price level (inflation or deflation).  This measure, real GDP per capita, reflects only economic activities that flow through markets, omitting productive endeavors unrecorded in market exchanges, such a preparing meals at home or maintenance done by the homeowner.  It ignores work effort required to produce income and does not consider conditions surrounding the work environment, which might affect health and safety.  Crime, pollution, and congestion, which many people consider important to their quality of life, are also excluded from GDP.  Moreover technological change, relative prices and tastes affect the course of GDP and the products and services that it includes, which creates what economists call an “index number” problem that is not readily solvable.  Nevertheless most economists believe that real GDP per capita does summarize or otherwise quantify important aspects of the average availability of goods and services.

Time Trends in Real GDP per Capita 

Table 1 shows the course of the material standard of living in the United States from 1820 to 1998.  Over this period of 178 years real GDP per capita increased 21.7 fold, or an average of 1.73 percent per year.  Although the evidence available to estimate GDP directly is meager, this rate of increase was probably many times higher than experienced during the colonial period.  This conclusion is justified by considering the implications of extrapolating the level observed in 1820 ($1,257) backward in time at the growth rate measured since 1820 (1.73 percent).  Under this supposition, real per capita GDP would have doubled every forty years (halved every forty years going backward in time) and so by the mid 1700s there would have been insufficient income to support life.  Because the cheapest diet able to sustain good health would have cost nearly $500 per year, the tentative assumption of modern economic growth contradicts what actually happened.  Moreover, historical evidence suggests that important ingredients of modern economic growth, such as technological change and human and physical capital, accumulated relatively slowly during the colonial period.

Table 1:  GDP per Capita in the United States

Year	GDP per capitaa	Annual growth rate from previous period
1820	1,257
1870	2,445	1.34
1913	5,301	1.82
1950	9,561	1.61
1973	16,689	2.45
1990	23,214	1.94
1998	27,331	2.04

a.  Measured in 1990 international dollars.

Source:  Maddison (2001), Tables A-1c and A-1d.

Cycles in Real GDP per Capita

Although real GDP per capita is given for only 7 dates in Table 1, it is apparent that economic progress has been uneven over time.  If annual or quarterly data were given, it would show that business cycles have been a major feature of the economic landscape since industrialization began in the 1820s.  By far the worst downturn in U.S. history occurred during the Great Depression of the 1930s, when real per capita GDP declined by approximately one-third and the unemployment rate reached 25 percent. 

Regional Differences 

The aggregate numbers also disguise regional differences in the standard of living.  In 1840 personal income per capita was twice as high in the Northeast as in the North Central States.  Regional divergence increased after the Civil War when the South Atlantic became the nation’s poorest region, attaining a level only one-third of that in the Northeast.  Regional convergence occurred in the twentieth century and industrialization in the South significantly improved the region’s economic standing after World War II.

Health and the Standard of Living

Life Expectancy 

Two measures of health are widely used in economic history:  life expectancy at birth (or average length of life) and average height, which measures nutritional conditions during the growing years.  Table 2 shows that life expectancy approximately doubled over the past century and a half, reaching 76.7 years in 1998.  If depressions and recessions have adversely affected the material standard of living, epidemics have been a major cause of sudden declines in health in the past.  Fluctuations during the nineteenth century are evident from the table, but as a rule growth rates in health have been considerably less volatile than those for GDP, particularly during the twentieth century.

Table 2:  Life Expectancy at Birth in the United States

Source:  Haines (2002)

Childhood mortality greatly affects life expectancy, which was low in the mid 1800s substantially because mortality rates were very high for this age group.  For example, roughly one child in five born alive in 1850 did not survive to age one, but today the infant mortality rate is under one percent.  The past century and a half witnessed a significant shift in deaths from early childhood to old age.  At the same time, the major causes of death have shifted from infectious diseases originating with germs or microorganisms to degenerative processes that are affected by life-style choices such as diet, smoking and exercise.

The largest gains were concentrated in the first half of the twentieth century, when life expectancy increased from 47.8 years in 1900 to 68.2 years in 1950.  Factors behind the growing longevity include the ascent of the germ theory of disease, programs of public health and personal hygiene, better medical technology, higher incomes, better diets, more education, and the emergence of health insurance.

Explanations of Increases in Life Expectancy

Numerous important medical developments contributed to improving health.  The research of Pasteur and Koch was particularly influential in leading to acceptance of the germ theory in the late 1800s.  Prior to their work, many diseases were thought to have arisen from miasmas or vapors created by rotting vegetation. Thus, swamps were accurately viewed as unhealthy, but not because they were home to mosquitoes and malaria.  The germ theory gave public health measures a sound scientific basis, and shortly thereafter cities began cost-effective measures to remove garbage, purify water supplies, and process sewage.  The notion that “cleanliness is next to Godliness” also emerged in the home, where bathing and the washing of clothes, dishes, and floors became routine.

The discovery of Salvarsan in 1910 was the first use of an antibiotic (for syphilis), which meant that the drug was effective in altering the course of a disease.  This was an important medical event, but broad-spectrum antibiotics were not available until the middle of the century.  The most famous of these early drugs was penicillin, which was not manufactured in large quantities until the 1940s.  Much of the gain in life expectancy was attained before chemotherapy and a host of other medical technologies were widely available.  A cornerstone of improving health from the late 1800s to the middle of the twentieth century was therefore prevention of disease by reducing exposure to pathogens.  Also important were improvements in immune systems created by better diets and by vaccination against diseases such as smallpox and diphtheria.

Heights 

In the past quarter century, historians have increasingly used average heights to assess health aspects of the standard of living.  Average height is a good proxy for the nutritional status of a population because height at a particular age reflects an individual’s history of net nutrition, or diet minus claims on the diet made by work (or physical activity) and disease.  The growth of poorly nourished children may cease, and repeated bouts of biological stress -- whether from food deprivation, hard work, or disease -- often leads to stunting or a reduction in adult height.  The average heights of children and of adults in countries around the world are highly correlated with their life expectancy at birth and with the log of the per capita GDP in the country where they live.

This interpretation for average height has led to their use in studying the health of slaves, health inequality, living standards during industrialization, and trends in mortality.  The first important results in the “new anthropometric history” dealt with the nutrition and health of Americans slaves as determined from stature recorded for identification purposes on slave manifests required in the coastwise slave trade.  The subject of slave health has been a contentious issue among historians, in part because vital statistics and nutrition information were never systematically collected for slaves (or for the vast majority of the American population in the mid-nineteenth century, for that matter).  Yet, the height data showed that children were astonishingly small and malnourished while working slaves were remarkably well fed.  Adolescent slaves grew rapidly as teenagers and were reasonably well off in nutritional aspects of health.

Time Trends in Average Height

Table 3 shows the time pattern in height of native-born American men obtained in historical periods from military muster rolls, and for men and women in recent decades from the National Health and Nutrition Examination Surveys.  This historical trend is notable for the tall stature during the colonial period, the mid-nineteenth century decline, and the surge in heights of the past century.  Comparisons of average heights from military organizations in Europe show that Americans were taller by two to three inches.  Behind this achievement were a relatively good diet, little exposure to epidemic disease, and relative equality in the distribution of wealth.  Americans could choose their foods from the best of European and Western Hemisphere plants and animals, and this dietary diversity combined with favorable weather meant that Americans never had to contend with harvest failures.  Thus, even the poor were reasonably well fed in colonial America.

Table 3:

Average Height of Native-Born American Men and Women by Year of Birth

Source:  Steckel (2002) and sources therein.

Explaining Height Cycles

Loss of stature began in the second quarter of the nineteenth century when the transportation revolution of canals, steamboats and railways brought people into greater contact with diseases.  The rise of public schools meant that children were newly exposed to major diseases such as whooping cough, diphtheria, and scarlet fever.  Food prices also rose during the 1830s and growing inequality in the distribution of income or wealth accompanied industrialization.  Business depressions, which were most hazardous for the health of those who were already poor, also emerged with industrialization.  The Civil War of the 1860s and its troop movements further spread disease and disrupted food production and distribution.  A large volume of immigration also brought new varieties of disease to the United States at a time when urbanization brought a growing proportion of the population into closer contact with contagious diseases.  Estimates of life expectancy among adults at ages 20, 30 and 50, which was assembled from family histories, also declined in the middle of the nineteenth century.

Rapid Increases in Heights in the First Half of the Twentieth Century

In the twentieth century, heights grew most rapidly for those born between 1910 and 1950, an era when public health and personal hygiene measures took vigorous hold, incomes rose rapidly and there was reduced congestion in housing.  The latter part of the era also witnessed a larger share of income or wealth going to the lower portion of the distribution, implying that the incomes of the less well-off were rising relatively rapidly.  Note that most of the rise in heights occurred before modern antibiotics were available, which means that disease prevention rather than the ability to alter its course after onset, was the most important basis of improving health. The growing control that humans have exercised over their environment, particularly increased food supply and reduced exposure to disease, may be leading to biological (but not genetic) evolution of humans with more durable vital organ systems, larger body size, and later onset of chronic diseases.

Recent Stagnation

Between the middle of the twentieth century and the present, however, the average heights of American men have stagnated, increasing by only a small fraction of an inch over the past half century.  Table 3 refers to the native born, so recent increases in immigration cannot account for the stagnation.  In the absence of other information, one might be tempted to suppose that environmental conditions for growth are so good that most Americans have simply reached their genetic potential for growth.  Unlike the United States, heights and life expectancy have continued to grow in Europe, which has the same genetic stock from which most Americans descend.  By the 1970s several American health indicators had fallen behind those in Norway, Sweden, the Netherlands, and Denmark.  While American heights were essentially flat after the 1970s, heights continued to grow significantly in Europe.  The Dutch men are now the tallest, averaging six feet, about two inches more than American men.  Lagging heights leads to questions about the adequacy of health care and life-style choices in America.  As discussed below, it is doubtful that lack of resource commitment to health care is the problem because America invests far more than the Netherlands.  Greater inequality and less access to health care could be important factors in the difference.  But access to health care alone, whether due to low income or lack of insurance coverage, may not be the only issues -- health insurance coverage must be used regularly and wisely.  In this regard, Dutch mothers are known for regular pre-and post-natal checkups, which are important for early childhood health.

Note that significant differences in health and the quality of life follow from these height patterns.  The comparisons are not part of an odd contest that emphasizes height, nor is big per se assumed to be beautiful.  Instead, we know that on average, stunted growth has functional implications for longevity, cognitive development, and work capacity.  Children who fail to grow adequately are often sick, suffer learning impairments and have a lower quality of life.  Growth failure in childhood has a long reach into adulthood because individuals whose growth has been stunted are at greater risk of death from heart disease, diabetes, and some types of cancer.  Therefore it is important to know why Americans are falling behind.

International Comparisons

Per capita GDP

Table 4 places American economic performance in perspective relative to other countries.  In 1820 the United States was fifth in world rankings, falling roughly thirty percent below the leaders (United Kingdom and the Netherlands), but still two-to-three times better off than the poorest sections of the globe.  It is notable that in 1820 the richest country (the Netherlands at $1,821) was approximately 4.4 times better off than the poorest (Africa at $418) but by 1950 the ratio of richest-to-poorest had widened to 21.8 ($9,561 in the United States versus $439 in China), which is roughly the level it is today (in 1998, it was $27,331 in the United States versus $1,368 in Africa).  These calculations understate the growing disparity in the material standard of living because several African countries today fall significantly below the average, whereas it is unlikely that they did so in 1820 because GDP for the continent as a whole was close to the level of subsistence.

Table 4: GDP per Capita by Country and Year (1990 International $)

Country	1820	1870	1913	1950	1973	1998	Ratio 1998 to 1820
Austria	1,218	1,863	3,465	3,706	11,235	18,905	15.5
Belgium	1,319	2,697	4,220	5,462	12,170	19,442	14.7
Denmark	1,274	2,003	3,912	6,946	13,945	22,123	17.4
Finland	781	1,140	2,111	4,253	11,085	18,324	23.5
France	1,230	1,876	3,485	5,270	13,123	19,558	15.9
Germany	1,058	1,821	3,648	3,881	11,966	17,799	16.8
Italy	1,117	1,499	2,564	3,502	10,643	17,759	15.9
Netherlands	1,821	2,753	4,049	5,996	13,082	20,224	11.1
Norway	1,104	1,432	2,501	5,463	11,246	23,660	21.4
Sweden	1,198	1,664	3,096	6,738	13,493	18,685	15.6
Switzerland	1,280	2,202	4,266	9,064	18,204	21,367	16.7
United Kingdom	1,707	3,191	4,921	6,907	12,022	18,714	11.0
Portugal	963	997	1,244	2,069	7,343	12,929	13.4
Spain	1,063	1,376	2,255	2,397	8,739	14,227	13.4
United States	1,257	2,445	5,301	9,561	16,689	27,331	21.7
Mexico	759	674	1,732	2,365	4,845	6,655	8.8
Japan	669	737	1,387	1,926	11,439	20,413	30.5
China	600	530	552	439	839	3,117	5.2
India	533	533	673	619	853	1,746	3.3
Africa	418	444	585	852	1,365	1,368	3.3
World	667	867	1,510	2,114	4,104	5,709	8.6
Ratio of richest to poorest	4.4	7.2	8.9	20.6	21.7	20.0

Source:  Maddison (2001), Table B-21.

Per capita GDP Growth

It is clear that the poorer countries are better off today than they were in 1820 (3.3 fold in both Africa and India).  But the countries that are now rich grew at a much faster rate.  The last column of Table 4 shows that Japan realized the most spectacular gain, climbing from approximately the world average in 1820 to the fifth richest today, with an increase of over thirty fold in real per capita GDP. All countries that are rich today had rapid increases in their material standard of living, realizing more than ten-fold increases since 1820.  The underlying reasons for this diversity of economic success is a central question in the field of economic history.

Life Expectancy 

Table 5 shows that disparities in life expectancy have been much less than those in per capita GDP.  In 1820 all countries were bunched in the range of 21 to 41 years, with Germany at the top and India at the bottom, giving a ratio of less than 2 to 1.  It is doubtful that any country or region has had a life expectancy below 20 years for long periods of time because death rates would have exceeded any plausible upper limit for birth rates, leading to population implosion.  The twentieth century witnessed a compression in life expectancies across countries, with the ratio of levels in 1999 being 1.56 (81 in Japan versus 52 in Africa).  Japan has also been a spectacular performer in health, increasing life expectancy from 34 years in 1820 to 81 years in 1999.  Among poor unhealthy countries, health aspects of the standard of living have improved more rapidly than the material standard of living relative to the world average.  Because many public health measures are cheap and effective, it has been easier to extend life than it has been to promote material prosperity, which has numerous complicated causes.

Table 5:  Life Expectancy at Birth by Country and Year

Country	1820	1900	1950	1999
France	37	47	65	78
Germany	41	47	67	77
Italy	30	43	66	78
Netherlands	32	52	72	78
Spain	28	35	62	78
Sweden	39	56	70	79
United Kingdom	40	50	69	77
United States	39	47	68	77
Japan	34	44	61	81
Russia	28	32	65	67
Brazil	27	36	45	67
Mexico	n.a.	33	50	72
China	n.a.	24	41	71
India	21	24	32	60
Africa	23	24	38	52
World	26	31	49	66

n.a.:  not available.

Source:  Maddison (2001), Table 1-5a.

Height Comparisons 

Figure 1 compares stature in the United States and the United Kingdom.  Americans were very tall by global standards in the early nineteenth century as a result of their rich and varied diets, low population density, and relative equality of wealth.  Unlike other countries that have been studied (France, the Netherlands, Sweden, Germany, Japan and Australia), both the U.S. and the U.K. suffered significant height declines during industrialization (as defined primarily by the achievement of modern economic growth) in the nineteenth century.  (Note, however, that the amount and timing of the height decline in the U.K. has been the subject of a lively debate in the Economic History Review involving Roderick Floud, Kenneth Wachter and John Komlos; only the Floud-Wachter figures are given here.)