MEASURING THE COST OF LIVING 17
Obviously the first requirement in determining the cost
of living on the basis of prevailing prices is to determine the
standard of living, that is, the kind of goods and services
consumed, their quality and quantity. To obtain a measure
of the necessary quantities to be allowed, the size and com-
position of the family must be fixed. On the basis of these
two considerations, a theoretical budget can be constructed,
listing the requirements for one week or one month or one
year, and the prices thereof can then be collected.
The Standard of Living
In determining the standards to be met, as just noted,
two different ideals prevail. One aims to picture conditions
as they are; the other, conditions as it is assumed they should
be. The first of necessity reflects any existing inadequacies,
such as improper housing or peculiar dietaries, as well as
such insufficiencies as are the result of inadequate incomes;
but it pictures the prevailing price level. The second type
of budget is hypothetical to the extent that the goods and
services required for its realization are not locally consumed,
even though they may be part of the consumption habits of
some families somewhere.! On the other hand, such inade-
Juacies in prevailing standards of goods and services con-
sumed as are due to lack of wherewithal to purchase them
would probably be remedied in time if incomes were adjusted
50 as to make the demand for them effective.
The possibly non-existent or theoretical local standard
has been upheld as the only means of bettering unsatis-
factory conditions;? the portrayal of costs as they actually
exist has been advocated as the only means of picturing
reality. As a matter of fact, each standard has its place and
may be used so long as it is adequately described. It
should be clearly understood, however, that the first standard
Pictures the minimum retail price level, and that the second
Is purely imaginary, to the extent that its cost is not based
on local means of meeting the standard specified. The fact
1 See, for example, Stecker, vp. cit., pp. 454-456, for some of the methods used
n reaching estimates of the minimum cost of living on this basis.
? See, for example, review by William F. Ogburn of Research Report No. 41,
OP. Cit, Fournal of the American Statistical Association, June, 1922, pp. 284-286.