Real GDP growth is conventionally a key goal of economic policy. Indeed, governments are apt to regard rising GDP as a kind of virility symbol, evidence of their economic prowess.

The UK economy has risen substantially over the past half-century, with real GDP (which strips out price effects) growing by 263% between 1956 and 2008.

Aggregate (total) GDP on its own does not tell the whole story. In particular, GDP divided by the size of the population is often regarded as the key indicator of standards of living in any given economy.

This widely-used measure of economic well-being is conventionally referred to as GDP per head (or, sometimes, ‘per capita’) and helps to illustrate the extent to which improved efficiency accounts for the growth of GDP as opposed to increases in population.

In the UK, both factors have been at play but, since GDP has grown much faster than the population, living standards have risen. It is worth noting, however, that with the population having increased by some 10 million since the early 1950s, the growth of GDP per head has been a little slower than the growth of aggregate GDP.

Even so, real GDP per head in the UK has trebled in the 50 years since 1958. For households, moreover, disposable incomes (income after deduction of direct taxes) have taken an increased share of GDP, so that household disposable income per head has risen even faster, by three and a half times in half a century.

Source: ONS

This growth translates into higher spending power for households, enabling more people to buy more goods and services. This is clear from Table 12.1: Share of households owning selected durable goods, 1970 – 2005-06, which shows households’ ownership of a range of ‘consumer durables’

Compared to thirty-five years ago, when barely half of households owned a car (or van), car ownership has risen to three-quarters of households.

Central heating, a luxury enjoyed by fewer than a third of households in 1970, is now almost universal, covering over 90% of households. Other consumer durable goods, such as washing machines, telephones, and video recorders have achieved similar household penetration rates

In purely material terms, at least, it is clear that people are generally better-off than they were twenty or thirty years ago, and if Harold Macmillan’s assertion that “you’ve never had it so good” was true in 1959, it could be equally true today.

Rising consumption of items such as televisions, videos, DVDs and hi-fi systems is related to increases in owner occupation and the growing tendency for leisure pursuits to revolve around the home.

Many people would argue, however, that living standards should not be defined solely by material circumstances. Although this seems intuitively self-evident, it is more difficult to measure trends relating the more intangible aspects of social and economic development.

Among the non-material factors that may affect economic utility (maximum satisfaction) are issues such as congestion, crime and ‘anti-social behaviour’, educational standards, environmental degradation, urban sprawl and loss of countryside.