Mehak Kampani, Sarah Shaikh, Natasha Benkhadra Measuring living standards Mehak Kampani, Sarah Shaikh, Natasha Benkhadra

Measuring living standards There are a no. of way you can measure living standards: GDP / GNP GDP per capita Household income Household wealth Educational attainment Health standards Happiness Empowerment

Real GDP Is the most common measure of living standards It is the national output divided by national income This a rough guide but has GDP has many limitations in measuring living standards Advantages of real GDP: Real GDP takes into account inflation – more accurate measure of economic growth and living standards. It is a good measure of economic growth It is comparable to other countries. Disadvantage of real GDP- Difficult to compare living standards because exchange rates do not reflect local purchasing power of a country Real GDP may underestimate economic development Doesn’t show extremities Doesn’t take into account the population of the country. The real GDP will not be spread out evenly as the population might be too high in comparison to the figure obtained.

GDP per Capita Economists estimate the average standard of living in a particular year in a particular country by taking the real GDP and dividing it by the population this gives the average amount of income that each individual in the population potentially has access to. In 2010, in UK, the purchasing power parity GDP was 2181.677 which is predicted to increase to 2642.875 in 2015. In comparison to India, which had a PPP of 4001.103 in 2010 , predicted to increase to 6384.601 in 2015. The increase is greater in India from 2010 to 2015 because they have greater poverty at the moment, which makes them available to more room for improvement in comparison to UK, which has a higher and steadier rate of living standards at present. Advantages: Much more accurate reflection of real economic growth Easy to compare between countries – reflects the distribution of income per person Disadvantages: GDP per Capita might ignore some population, which might be unemployed or are hidden in minorities.

GNP – Gross National Product GNP is the market value of all goods and services produced in one year by labor and property supplied by residents of a country. Unlike GDP, it defines production based on geographical location of production. GNP = net property income + GDP Disadvantages: When net property income is calculated from abroad, the exchange rates might effect the total figure- effects the accuracy of results. Advantages: Includes almost all factors of GDP plus the foreign investments therefore making it more accurate.

Household Income Household income includes all the income of all residents over the age of 18 in each household, Including not only all wages and salaries, but such items as unemployment insurance, disability payments, child support payments, regular rental receipts, as well as any personal business, investment, or other kinds of income received routinely Household income is often the combination of two income earners pooling the resources and should therefore not be confused with an individual's earnings. It helps measure standard of living as generally the higher the household income the better the standard of living as there is a larger amount of income available to facilitate goods and services to enhance living standards Many households consist of a single person, average household income is usually less than average family income, because a household consisting of a single person is not included in the average family income calculation.

A comparison between household income and GDP per capita for developed countries is shown in this chart. This graph shows there is a slight/weak correlation between the between the GDP and Median household income as they are in some cases quite similar such as Singapore and Israel. However in countries such as Switzerland and New Zealand they are noticeably different with the household income being much higher than the GDP per capita. On the graph UK ‘s GDP per capita is also lower then its household wealth this is because there is a greater average amount of money in each household compared to the average of what a single individual is earning.

Household Wealth Economists interpret and define wealth to be the value of all household resources, both human and non-human, over which people have command.While only one part of personal resources, capital is believed to have an uneven impact on living standards and economic success. The average household in Britain has seen its wealth jump more than £150,000 during the last half century In 1959, typical household wealth – including equity in property, savings, pensions and shares – was the equivalent of £72,700 in today’s money. By last year, the figure had risen to £237,000. The biggest rise was seen in the 1980s when household wealth more than doubled, but household wealth fell by 15 per cent between 2007 and 2008 and remained 8 per cent below its 2007 high despite an improvement last year.  The increases in house prices and a large rise in the number of privately owned homes have been some of the main factors pushing up households’ wealth which has lead to higher living standards in the UK. 

Educational attainment Is a term commonly used by economists to refer to the highest degree of education an individual has completed. Education improves ones opportunities to gain access to further education while improving ones critical and analytical thinking skills This makes a person more employable for future jobs and ensures good employment for a good high income. With a higher income a person is automatically inclined to be able to purchase a greater variety of goods and services which could include comprehensive health care, social services, and insurance. Therefore leading to a higher standard of living and better secure family lives (usually, but not always) As a result the level of education a person manages to achieve is generally connected to there future standard of living, and affects there level of income. Higher degree of education = Higher standard of living

This graph shows that the higher the degree of education received the higher the weekly earnings which means more income and the lower the unemployment rate in that sector. The fact that there is lower unemployment and higher salary with more education exemplifies the fact it leads to higher standard of living. Therefore Education can be used to measure standard of living .

Health standards Health is the general condition of a person in all aspects. As they say “He who has health, has hope. And he who has hope, has everything.” -- > better health = better living standards The better the health standards the more able a person is to carry out work which in turn allows him/her to attain income The larger amount of income increasing living standards, making health a measure of living standards. If a person is unwell his unable to attend work and attain an income reducing spending power and in turn his standard of living. However if to attain good health standards you must receive good healthcare then this could have a negative affect on the standard of living as you may need to pay a certain amount of ones income further reducing ones spending power.

This graph shows that the higher the life expectancy the more spending per capita which suggests that to live longer you need to spend more on healthcare to improve you health and lengthen your life this can then have a negative effect on the standard of living by reducing it as a person will have less income to spend on other goods and services or with better health it can enable them to do more work and attain more income In the UK its around 2250 per capita spending with an average life expectancy of about 77.5 this is relatively low compared to other countries such as Sweden which is around 4000 per capita spending with an average life expectancy of about 80

Happiness This heading revolves around the idea of : “the happier one is, the better their living standards”. There are several factors which are affected by ones happiness levels:   If a person is happy, he/she is more likely to work harder in their job, to try to earn a higher income which would ensure a better standard of living. And vice versa, if a person is depressed or unhappy, he/she is not going to put enough effort into their job which means a lower income --> lower standards of living.  This might further affect one’s health and could cause several psychological problems which again may lead to poor living conditions.

Gender Empowerment The Gender Empowerment Measure (GEM) is a measure of inequalities between men's and women's opportunities in a country. It combines inequalities in three areas: political participation and decision making, economic participation and decision making, and power over economic resources.  It affects the living standards of a country because if there is more of one race, this could result in sexism due to different moral beliefs or traditions which could further lead to inequality between genders – lowering standard of living .

Gender Empowerment This map shows how populations rate on the Gender Empowerment Measure. This measure is an indicator of opportunities for women. By this measure no territory has as good opportunities for women as there are for men. The territories where women have the most opportunities are in Western Europe more liberal views . The fewest opportunities for women are in the Middle Eastern territories of Yemen and Saudi Arabia this could be due to religious and moral beliefs e.g. Islam. There was no data for any territory in Central Africa.