Ideally, real wages in Asia and Europe should be compared by specifying a basket of consumer goods that could be priced in both continents.

The cost of that basket would be the deflator that converted nominal into real wages. This was the procedure used to compare living standards across Europe in Allen (2001), but it must be modified to deal with differences in diet between Europe and Asia.

Bread was the major source of calories in Europe and accounted for about one-third of spending in the European consumer price index. Rice was the counterpart in Asia. Calculations for India, where bread was also consumed, show that rice was the cheapest source of calories. This was generally true in China, although in Yangzi wheat gruel was cheaper in the summer and eaten by the poorest people (Li 1998).

I have dealt with the issue of bread and rice by specifying different baskets for Europe and Asia (Table 5.1). 143 kg of rice/year was included in the Asian basket versus 208 kg of bread in the European basket. Rice has more calories per kilogram than bread, and these weights correspond to the same calorie intake per day (1950). (The European diet, however, was richer in protein.) The budgets also include peas (or beans), meat, and fat (ghi, butter, or oil depending on the locale). Non-foods include oil for illumination and cotton cloth in Asia and linen in Europe. ‘When in Rome, do as the Romans' was the philosophy that defined the basket of goods, subject to the requirement that it yield the same number of calories. Weights and nutritional composition are shown in Table 5.1.

This scheme can be applied to India, but not all of the prices are available for Japan and China. Two methods have been adopted to solve this problem. One is to estimate the missing prices by using Indian price relatives. The resulting prices, the costs of the baskets, and the implied real wages are set out in the Appendix, Tables 5.A1—5.A4. These calculations are extended, or other indices are linked to them, as will be explained.

The second approach is to simplify the calculations radically by using the cost of a calorie implied by the prices of rice and bread as the deflator. Both procedures lead to similar results.

Table 5.1 European and Asian baskets and nutrition

	India			Europe
	Quantity	Daily calories	Daily protein	Quantity	Daily calories	Daily protein
Foods
Rice	143.0kg	1403	39	—	—	—
Bread	—	—	—	208.0kg	1400	57
Peas	52.0l	161	10	52.0l	161	10
Meat	26.0kg	179	14	26.0kg	179	14
Fat	10.4kg	208	0	10.4kg	208	0
Total	—	1951	63	—	1948	81
Non-foods
Oil	2.6l	—	—	2.6l	—	—
Cloth	5.0m	—	—	5.0m	—	—

Source. Appendix, Tables 5.A1—5.A4.

3.1

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Source: Allen R.C., Bengtsson T., Dribe M.. Living Standards in the Past: New Perspectives on Well-Being in Asia and Europe. Oxford University Press,2005. - 495 p.. 2005

Ideally, real wages in Asia and Europe should be compared by specifying a basket of consumer goods that could be priced in both continents.

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