The generally accepted measure of the standard of living is GDP per capita.
This is a nation’s gross domestic product divided by its population.
Real GDP per capita removes the effects of inflation or price increases.
Real GDP is a better measure of the standard of living than nominal GDP.
Is real GDP a good measure of standard of living?
Using GDP per capita as a way of measuring standard of living* is useful because it is a quantitate measure that can be used to get a basic understanding of otherwise qualitative factors that contribute to higher living standards, such as wellbeing, quality of life, and happiness.
Why is GDP a bad measure of standard of living?
GDP is an indicator of a society’s standard of living, but it is only a rough indicator because it does not directly account for leisure, environmental quality, levels of health and education, activities conducted outside the market, changes in inequality of income, increases in variety, increases in technology, or the
What are the limitations of using GDP as a measure of living standards?
Limitations of Using GDP as a Measure of Quality of Life
It does not include productive activity that does not have a market transaction. Although GDP and its related concepts are useful in measuring a country’s output, income, and standard of living, they are not perfect measures of quality of life.
How is the standard of living measured?
Yet there is a generally accepted measure for standard of living: average real gross domestic product (GDP) per capita. Let’s break it down piece by piece: GDP measures annual economic output — the total value of new goods and services produced within a country’s borders.