What Is Standard of Living?
Let me explain what standard of living really means. It's the material well-being of an individual or a whole population, determined by how well they can access life's necessities like a living wage, decent housing, and food. When we evaluate this for a group, we look at things like average income, gross domestic product (GDP), life expectancy, and economic opportunities.
In broader terms, standard of living covers wealth, comfort, and access to material goods. At its core, it's about income and consumption levels.
Key Takeaways
- The standard of living is the material well-being of an average person in a given population.
- Standard of living and quality of life rely on some of the same data, but standard of living focuses on physical necessities while quality of life encompasses less tangible factors such as religious freedom and political stability.
- One standard of living measurement is the Human Development Index (HDI), which uses factors from life expectancy and access to education to homicide rates.
Understanding Standard of Living
Standard of living zeros in on basic material factors like income, GDP, life expectancy, and economic opportunity. It's closely tied to quality of life, which might include things like economic and political stability, freedoms, environmental quality, climate, and safety.
We often use standard of living to compare different places, like the U.S. versus Canada, or cities like St. Louis versus New York. You can also compare it across time periods.
For instance, if you look back a century in the U.S., the standard of living has improved dramatically. The same work effort gets you more goods now, and former luxuries like refrigerators and cars are commonplace. Life expectancy is up, and people work fewer hours annually.
Economists often measure it narrowly with GDP. Per capita GDP gives a rough idea of goods and services available per person. More complex metrics exist, but many align closely with per capita GDP.
Standards of living are generally higher in developed countries. Basic measures like per capita GDP often distinguish developed from less developed nations. Emerging economies typically see their standards rise as they industrialize.
Standard of Living Example
Consider the United Nations' Human Development Index (HDI) as a practical measure. It scores 189 countries on life expectancy at birth, education, and income per capita. In 2019, top scorers were Norway at 0.957, Ireland and Switzerland at 0.955, Hong Kong and Iceland at 0.949, and Germany at 0.947.
The lowest were Niger at 0.394, Central African Republic at 0.397, Chad at 0.398, Burundi and South Sudan at 0.433, and Mali at 0.434. The U.S. ranked 17th, China 85th.
To show the gap, Norway has a life expectancy of 82.4 years, 18.1 years of expected schooling, GNI per capita of $66,494, and 96.5% internet usage. Niger, by contrast, has 62.4 years life expectancy, 6.5 years schooling, $1,201 GNI per capita, and 5.3% internet usage.
The U.S. scored 0.926 overall, with 78.9 years life expectancy, 16.3 years schooling, and $63,826 GNI per capita.
Standard of Living vs. Quality of Life
People often mix up standard of living and quality of life, but they're not identical. Standard of living is about wealth, comfort, material goods, and necessities in specific areas, or more objectively, income and consumption measures.
Quality of life is subjective and intangible, covering things that affect well-being like personal liberty or environmental quality. What counts as good quality of life for you might differ from someone else.
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