Standard of living refers to the quantity and quality of material goods and services available to a given population.
Key Takeaways
- Standard of living reflects the material well-being of the average person in a given population.
- It is commonly measured using gross domestic product (GDP) per capita.
- Both standard of living and quality of life utilize similar data, with standard of living focusing on physical dimensions, while quality of life pertains to intangible aspects.
- An alternative measure of standard of living is the Human Development Index (HDI), which takes into account factors like life expectancy, education, gross national income (GNI), and homicide rates.
Deepening Your Understanding of Standard of Living
Standard of living invites focus on basic material factors such as income, GDP, life expectancy, and economic opportunity. While closely related to quality of life, which also examines factors like economic and political stability, freedom, environmental quality, climate, and safety. Valuing standard of living offers insights for comparing geographic areas such as the United States versus Canada or metropolitan areas like St. Louis versus New York, as well as distinct points in time.
For instance, compared with a century ago, the standard of living in the United States has notably improved. Today, the same amount of work equates to more goods, with luxuries like refrigerators and automobiles now commonplace. Furthermore, life expectancy has surged, and annual hours worked have declined.
Economists frequently rely on GDP to measure standard of living. Per capita GDP provides a rough estimate of total goods and services available per person. Although more complex metrics exist, many align closely with per capita GDP. Higher standards of living often characterize developed countries, using metrics like per capita GDP to differentiate between more and less developed nations. Emerging market economies observe rising standards of living as they progressively modernize.
Illustrative Examples of Standard of Living
One notable measure of standard of living is the United Nations’ Human Development Index (HDI), which evaluates 189 countries based on life expectancy at birth, education, and income per capita. In 2019, top performers in HDI included Norway (0.957), Ireland and Switzerland (0.955), Hong Kong and Iceland (0.949), and Germany (0.947). Meanwhile, nations with the lowest 2019 HDI scores were Niger (0.394), Central African Republic (0.397), Chad (0.398), Burundi and South Sudan (0.433), and Mali (0.434). The United States and China ranked 17th and 85th, respectively.
Consider the difference between scores 0.957 (Norway) and 0.394 (Niger). Norway boasts a life expectancy at birth of 82.4 years, 18.1 expected years of schooling per individual, a GNI per capita of $66,494 (adjusted for purchasing power parity), and a 96.5% internet usage rate. Conversely, Niger presents a life expectancy at birth of 62.4 years, 6.5 expected years of schooling, a GNI per capita of $1,201, and a 5.3% internet usage rate.
The United States, scoring 17th, showcased a score of 0.926, a life expectancy at birth of 78.9 years, 16.3 expected years of schooling, and a GNI per capita of $63,826.
Standard of Living vs. Quality of Life: Knowing the Difference
Standard of living and quality of life are often perceived as synonymous. However, these terms serve different purposes.
Standard of living primarily refers to tangible measures such as wealth, comfort, material goods, and necessities across classes or regions. It measures factors of income and consumption.
Quality of life, however, embraces more subjective, intangible elements that affect human well-being. This encompasses happiness, personal liberty, environmental quality, among others. Notably, attributes defining good quality of life for one individual might differ for another.
Related Terms: GDP per capita, Quality of Life, Human Development Index, Life Expectancy, Economic Inequality.
References
- United Nations Development Programme. “Human Development Index (HDI)”.
- Our World in Data. “Working Hours”.
- Economic History Association. “A History of the Standard of Living in the United States”.
- United Nations Development Programme. “2020 Human Development Report”.
- United Nations Development Programme. “Norway”.
- United Nations Development Programme. “Niger”.
- United Nations Development Programme. “United States”.