Living standards
Measuring living standards
- Real GDP per head is the main indicator: total output, after removing rising prices, divided by population — roughly the average income per person.
- The Human Development Index (HDI) is wider — it combines income, education (schooling) and health (life expectancy) into one number 0–1.
Practice
The Human Development Index (HDI) combines which three things? (Choose all that apply.)
HDI combines income, education and health into one number between 0 and 1.
Practice
Real GDP per head removes the effect of rising prices and divides by the population.
Real = inflation removed; per head = divided by population — giving average output per person.
Limits of the comparison
- GDP per head is an average — it hides the income distribution (a few rich, many poor).
- it leaves out unpaid work, pollution, free time and safety.
- prices differ between countries, so the same income buys different amounts.
- That's why HDI is often a better guide.
Practice
A limitation of GDP per head as a measure of living standards is that it:
A high average can hide great inequality; GDP also ignores unpaid work, pollution and free time.
You've got it
Key idea
- main indicator: real GDP per head; the HDI adds education and health
- GDP per head is an average — it hides inequality and ignores pollution/free time
- HDI (income + education + health) gives a fuller picture