Measuring living standards, comparing developed and developing economies, poverty, and population.
Measuring living standards
The most common measure is GDP per head (per capita) — total output divided by population. To compare over time we use real GDP (adjusted for inflation).
GDP has limitations: it ignores income distribution, the informal economy, non-market activities, leisure time, pollution and overall quality of life. So economists also use the Human Development Index (HDI), which combines:
Other indicators of living standards include access to clean water, healthcare, housing, literacy and infant mortality rates.
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