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Real GDP Per Capita and the Standard of Living
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Real GDP Per Capita and the Standard of Living

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In this video, the speaker discusses whether Real GDP per capita is a good measure of the standard of living. They explore the correlation between Real GDP per capita and other factors such as life expectancy, happiness, and human development.

Is Real GDP per capita a good measure of the standard of living?

  • Real GDP per capita is not a perfect measure but it is considered the best single measure of the average standard of living in a country.
  • It is correlated with many other factors that we care about, such as life expectancy, happiness, and education.

Correlation with Life Expectancy

  • There is a positive correlation between Real GDP per capita and life expectancy.
  • Countries with higher GDP per capita tend to have higher life expectancies.

Correlation with Happiness

  • There is also a positive correlation between Real GDP per capita and happiness.
  • Countries with higher GDP per capita tend to have happier people on average.

Human Development Index

  • The Human Development Index combines measures of life expectancy, education, and standard of living.
  • Overall, countries with higher GDP per capita tend to have higher human development according to this index.

Limitations of Real GDP per Capita

  • One limitation is that it misses the distribution of income within a country.
  • Countries with similar Real GDP per capita can have different levels of poverty due to income inequality.

Growth in Per Capita Incomes

  • Over time, growth in Real GDP per capita usually indicates growth in everyone's incomes, including the very poor.
  • There is a positive correlation between average per capita income and the incomes of the poorest 20%.

Conclusion

  • Real GDP per capita has proven to be a useful measure for comparing the standard of living between countries or over time.
  • Increasing the standard of living and growing an economy are important questions that will be addressed in future videos.

How do we increase the standard of living?

This section introduces the question of how to increase the standard of living and grow an economy. It encourages viewers to provide feedback on the videos and resources.

Feedback and Next Steps

  • Viewers are encouraged to provide feedback on the videos and suggest improvements.
  • The website MRUniversity.com offers a library of videos and resources for further learning.

The transcript is already in English, so there is no need to respond in a different language.

Playlists: Economics [Intermediate] Pt.1 Principles of Economics: Macroeconomics Unit 1: GDP
Video description

They say what matters most in life are the things money can’t buy. So far, we’ve been paying attention to a figure that’s intimately linked to the things money can buy. That figure is GDP, both nominal, and real. But before you write off GDP as strictly a measure of wealth, here’s something to think about. Increases in real GDP per capita also correlate to improvements in those things money can’t buy. Health. Happiness. Education. What this means is, as real GDP per capita rises, a country also tends to get related benefits. As the figure increases, people’s longevity tends to march upward along with it. Citizens tend to be better educated. Over time, growth in real GDP per capita also correlates to an increase in income for the country’s poorest citizens. But before you think of GDP per capita as a panacea for measuring human progress, here’s a caveat. GDP per capita, while useful, is not a perfect measure. For example: GDP per capita is roughly the same in Nigeria, Pakistan, and Honduras. As such, you might think the three countries have about the same standard of living. But, a much larger portion of Nigeria's population lives on less than $2/day than the other two countries. This isn’t a question of income, but of income distribution—a matter GDP per capita can’t fully address. In a way, real GDP per capita is like a thermometer reading—it gives a quick look at temperature, but it doesn’t tell us everything. It’s far from the end-all, be-all of measuring our state of well-being. Still, it’s worth understanding how GDP per capita correlates to many of the other things we care about: our health, our happiness, and our education. So join us in this video, as we work to understand how GDP per capita helps us measure a country’s standard of living. As we said: it's not a perfect measure, but it is a useful one. Macroeconomics Course: http://bit.ly/1R1PL5x Ask a question about the video: http://bit.ly/1WJcJ5w Next video: http://bit.ly/1S1CxuA Help us caption & translate this video! http://amara.org/v/H04s/