Abstract
<jats:p>iving standards is one of the hottest political issues in the UK today. But when it comes to measuring household incomes, the choice of metric matters. There are two main measures that policy makers use to track UK household incomes: Real Household Disposable Income (RHDI) and Households Below Average Income (HBAI). RHDI is a macroeconomic measure designed to capture the real purchasing power of households. It is internationally comparable and timely, providing a mean value for household income but with little nuance beyond. [1] The alternative metric is HBAI, which measures household income at different points in the distribution including at the median. Unlike RHDI, HBAI adjusts for household size and composition, and takes a more expansive view of housing costs. However, data quality can be an issue, and there is a two-year lag between collection and publication. These distinctive features mean that the two measures can tell very different living standards stories. For example, RHDI shows that between 2005-06 and 2023-24, mean household income grew by 14 per cent, while HBAI shows median household income after housing costs grew by 8 per cent. For this reason, whenever policy makers make statements about living standards, it is important to understand which measure they are using, and what it truly represents.</jats:p>