The standard of living measures our material welfare
| “Equity, dignity, happiness, sustainability – these are all fundamental to our lives but absent in the GDP. Progress needs to be defined and measured in a way which accounts for the broader picture of human development and its context" |
Source: Helen Clarke, UNDP
Real income per capita is an inaccurate and insufficient indicator of living standards
For many economists, there is a growing disconnect between GDP and wellbeing
National income data can be used to make cross-country comparisons. This requires
Problems in using national income statistics to measure living standards
Reasons why GDP data may give a distorted picture of living standards in a country:
Bill Gates on Alternative Measures of the Standard of Living
You will find more statistics at Statista
Imperfect measures of GDP should not be the only criteria by which economies are judged. India’s Amartya Sen, a Nobel Prize-winning economist, has correctly said that achieving other factors — he calls them capabilities — should play a prominent role in determining government policy. Some of these can be boiled down to outcomes in health, literacy and welfareFinancial Times, Leader Article, 17th February 2015
Moving away from GDP per capita – the case for median household incomes
There is widespread agreement that changes a nation's GDP per capita are an inadequate measure of human wellbeing.
Instead of tracking changes in mean per capita incomes, some economists are now pushing for an extra indicator – namely changes in median per capita household incomes. Household income measures the flow of income that finds its way to households each year.
The median is better than the mean since it is reflective of progress in the middle of the income distribution. For example, increases in GDP that go solely to the rich would not increase this measure. Looking at median income would create more focus on inclusive growth that generates wider benefits.
In the United Kingdom, median income growth has lagged behind GDP per capita since the early 1980s, in part because of the growth of income inequality reflected in an increase in the Gini coefficient.
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