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Last Updated: Monday, 28 January 2008, 18:26 GMT
From cigarettes to satellite dishes
Analysis
By Steve Schifferes
Economics reporter, BBC News

UK household income has doubled in real terms over the last fifty years.

spending on household items

And the pattern of family spending has also changed dramatically. Basic necessities including food accounting for a smaller proportion of our family budget, while spending is up on leisure activities, travel and motoring.

Housing also makes up a greater share.

But our greater spending on leisure has not necessarily made us happier.

There are big social divisions in the ownership of some popular consumer goods, and the greater affluence is at least partly a result of more families having two incomes.

The findings have emerged from the Office for National Statistic's publication of the 50th Anniversary of the Family Expenditure Survey, which began in 1957.

'Alcohol and tobacco'

The earlier survey paints a picture of Britain emerging from wartime rationing, when basic spending on food, fuel and rent made up the bulk of the family budget.

In 1957, those three items made up nearly half of all household expenditure. Taken together with clothing and travel, basics made up nearly two-thirds of family spending.

The main luxuries for the ordinary family were tobacco and alcohol, which combined made up just under 10% of spending.

The biggest other luxury item was meals eaten out making up 3% of spending.

Four of the top ten spending items were food or drink, with spending on meat, fruit, vegetables and beer all in the top twenty.

Overall, the average family spent a total of 14.30 per week in 1957, out of a gross income of 16. In today's money, spending was 243 per week.

Spending on alcoholic drinks accounts for the same proportion of spending as it did 50 years ago at 3% - although in absolute terms it is much higher.

But in contrast, the proportion of the average budget spent on tobacco has fallen sharply from 6% in 1957 to just 1% in 2006.

Modern life

In 2006 the average household spent 456 out of a gross income of 642 before taxes.

In five decades, spending on most basics has declined sharply, with food making up only half as much of the average household budget as it did in 1957.

HOUSING COSTS UP
For sale signs

And half of that food budget now consists of meals and takeaways - a new category introduced in the l970s.

But the cost of housing, including mortgage interest payments or rent, has more than doubled since 1957.

Using a slightly broader measure of housing costs, which includes council tax, insurance and home improvements, UK households spent an average of 143 a week on housing-related costs in 2006 - or 22%.

Cars and leisure

But most striking is the growth of leisure, holiday and motoring activities.

Motoring and travel costs have doubled from 8% of spending in 1957 to 16% in 2006, mostly because of rising car ownership, with three in four households owning at least one car.

Also rising is our spending on leisure activities, including everything from holidays, DVD rentals and sports clubs.

The top ten spending items in 2006 - after mortgages, rent and council tax - included spending on motor vehicles, holidays and meals.

Growing affluence - and division

The survey shows the rapid adoption of new technologies by most UK households.

The proportion of households with a satellite, digital or cable receiver rose from 28% in 1998-9 to 71% in 2006, while the number having mobile phones rose to 80% and home computers reached 67%.

But there are big differences in consumption between rich and poor.

Nearly every household in the richest tenth of the population had a computer and an internet connection.

In contrast, among the poorest tenth, only 31% have computers and 21% have an internet connection.

And 56% of that group have mobile phones, compared to 92% of the richest tenth.

The pattern of car ownership also varies sharply by income, with less than a third of the poorest tenth of households owning a car, compared to 94% of the richest tenth of families.

Happier

But while disposable incomes have grown there is no proof this has made us happier.

According to economist Richard Layard of the London School of Economics, once people can afford the basics, happiness does not increase with income when comparing happiness among rich and poor countries.

And looking at surveys of happiness over time, he says levels of happiness have not changed across either the UK - or the US - in the last 30 years, despite the doubling of living standards in both.

Moreover, the availability of new goods can just make people more jealous of what they are unable to afford, especially for the less well-off.

Survey evidence suggests that it is good relationships - such as a good marriage or seeing friends and family - and satisfaction at work that contributes most to happiness.

Other studies show that what we have lost in the last 50 years is time.

Strikingly, most families now talk more in the car than at home.

Paradoxically while we spend more on leisure goods than half a century ago, we have less time to enjoy our free time - increasing numbers of households need two earners and working hours have risen.

About the Family Spending Survey: The Family Spending survey - now known as the Expenditure and Food Survey - gathers information on household income and spending on a range of goods and services. This is then analysed according to an internationally-agreed system known as the Classification of Individual Consumption by Purpose (CIOCOP). It is based on a sample 6,644 households who keep a 2-week diary of spending as well as complete a face-to-face interview on income and spending. The data feeds into calculations for the Retail Price Index (RPI), and is widely used by government departments, business and academics. Not all categories are comparable over time.




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