Notably, the decrease in poverty between 1900 and 1967 occurred before the advent of the greatly expanded welfare state. In other words, it was the free market, not government welfare, that caused the poverty rate to fall from 56 percent in 1900 to 13 percent in 1967. Obviously, what happened to real incomes and poverty rates demonstrates that the free market does not leave the poor behind. Another measure of the standard of living is the level of goods and services consumed. Real per person spending on consumer goods rose dramatically between 1900 and 1990.
Health is another important component of the standard of living.
Life expectancy at birth was 47.3 years in 1900, and 75.4 years in 1990. Deaths from once-common diseases have dropped dramatically since 1900. It was not primarily medical advances, but improved water and sewer systems and housing, that lowered mortality rates and helped the poor far more than the rich. But, as noted earlier, living standards depend on the goods and services consumed, so a family should be classified as poor on the basis of its level of consumption, not income. Households officially now counted as poor are as likely to own a host of major consumer goods as was the general population just two decades ago.