Purchasing Power of Urban, Rural Nonfarm, and Rural Farm Income, 1955

Measures of per capita dollar incomes seem, at first hand, to be a good simple first approximation to obtaining some idea of the differences that exist between farmers' living standards and those of nonfarmers at any one point in time. But unfortunately, the following factors, among others, make the correspondence of income and living standards difficult: (1) The consideration of assets accumulated by both groups, (2) differences between farm and city "ways of life," (3) valuation problems with respect to dwellings, especially farm dwellings, (4) valuation of home-produced food and fuel consumed on the farm, and (5) differences between prices paid by farmers and nonfarmers for the goods and services they consume. This paper is addressed to item 5. In other words, after obtaining measures of income for both farm and nonfarm populations, and adjusting them for factors 1, 2, 3, and 4, is there left enough difference between the purchasing powers of such incomes to warrant a further adjustment in the basic income estimates to translate them into comparable measures of living stan,dards? This is the question that the author of this article examines.