It would correlate, except so many things have gotten dramatically cheaper while the cost of, say, bread has stayed the same (adjusted for inflation). It's possible for inflation-adjusted income to stagnate while standard of living increases, and I'd argue that it has. As petty as it sounds, I'm pretty glad I live in a world with Google.
Depends how you define standard of living. If we consider "standard of living" to mean "happiness", as you seem to imply, that actually correlates well with real (inflation/CPI-adjusted) income. Accordingly, happiness levels have been flat and/or declining for the vast majority of the population [1], just as real wages have.
This may be a gap in my understanding of objective measures of standard of living. I agree I'd rather have Google. I'll have to do some research.
It may be a moot point, since no one can objectively compare their standard of living to that of an equivalent person 40 years ago (or even themselves 40 years ago.)
I totally agree and didn't mean to imply this. My point is that the median income level as an absolute, adjusted for inflation, has not increased significantly since 1970. I believe this does correlate fairly well to standard of living over the long term.
EDIT: Here's one source. Open to criticism. http://www.stanford.edu/class/polisci120a/immigration/Median...