Question

A. Explain why GDP is an effective measure of living standards.

B. Discuss how quality-of-life measures may be determined and measured.

C. Explain why aspects of our quality of life in the United States may be difficult to compare with other countries around the world.

Answer 1

A. GDP per capita is a useful measure as a summary indicator of living standards in a country, since Gross Domestic Product measures the market value of all final goods and services produced within a country in a given period of time. 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. Economists have a fairly developed understanding of GDP per capita as it relates to wellbeing, and typically better economic situations have a strong correlation to higher living standards.

B.

1. Look up your country's GDP. The Gross Domestic Product measures the amount of goods and services produced in a country per year. It determines the country’s financial output and measures how much money people are making in the country annually. If your country is ranked high on the list, this could mean your quality of life is high. If your country is ranked towards the bottom of the list, the quality of life in your country may be lower.

2. Calculate the GDP for individuals in your country. To look at GDP on an individual basis, you can divide a country’s GDP by its total population to get the GDP per capita. This reflects how much money on average a person in the country earns per year.

3. Check your country’s HDI. The Human Development Index (HDI) looks at schooling for the population in a country. It also looks at the life expectancy at birth and the gross national income per capita, or how much money people make on average. The UN releases a detailed map of HDI rankings around the world every year, ranking each country from “very high human development” to “low human development." If your country has a high HDI, it usually means the quality of life is high.

4. Find out where your city ranks on the Mercer Quality of Living Survey. This survey is put out by the Mercer organization to determine the quality of life in 200 cities around the world. The survey asks questions about public safety, public transportation, political stability, and the quality of the environment, as well as entertainment and culture. If your city participated in the survey this year, look on the Mercer website to find out where it ranks.

C. The US is the world’s largest national economy, and the epitome of industrialization. Because of its wealth, high standards of living, and availability of world-class services, many Americans believe theirs to be one of the better—or outright best—countries in the world to live.

Measuring wellbeing can be tricky: Seemingly objective standards, like income, are affected by the availability of social services, which improve life even for low-earners. Infant mortality, another common measure of wellbeing, can actually be higher in countries where advanced healthcare technologies allow premature babies to be born in the first place. Nonetheless, there are some comparisons we can make: In 2015, the United Nations defined 17 goals for any country claiming to achieve complete sustainable development. Those goals range from ending poverty, to gender equality, to environmental preservation.

Since the US ranks about average in water and sanitation, sustainable production and consumption, ocean preservation, and landscape preservation, we didn’t highlight those in the analysis. We also didn’t look into climate change, as the sheer size and population of the US make it difficult to compare its impact with other countries, and didn’t explore the last development goal, global partnership, as it’s intended as an instrumental tool to implement other goals.

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