Article (1): What is standard of living?
By JC Economics Tutor Simon Ng, Economics Focus
A country’s Standard Of Living (SOL) is a key indicator of a country’s success and it determines whether it is a developed or developing country. Standard Of living encompasses both the quantitative, tangible, and the qualitative, intangible, aspects.
So you may be wondering what exactly is a country’s SOL and what does it entail. The formal definition of SOL is it ‘Measures the average quality of the life of a population which includes both the material and non-material aspects of life’.
To better understand SOL, we shall break it down into its two parts, the quantitative and the qualitative components.
The quantitative SOL is measured in terms of the purchasing power that the population processes which will then reflect the level of material comforts attainable by them and this is most commonly represented by the real income per capita. It is the only economic indicator that directly determines the quantitative value of SOL.
The qualitative SOL is measured in terms of the quality of life led by the population, which will reflect the intangible aspects, the comfort of life that the people have and this is commonly represented by the mortality rate, birth rate, level of working hours, stress and the level of externalities in the country consumption and production. The use of qualitative economic indicators like Human Development Index and Measurement of Economic Welfare will give a more complete picture of SOL.
However, when we measure the standard of living using the quantitative and qualitative economic indicators, we must take note of the limitations of the real per capita income and qualitative indicators like Human Development Index and Measurement of Economic Welfare.
The limitations of real GDP per capita in measuring SOL will be due to the problems of time and space comparison while the limitations of qualitative indicators can be seen from the difficulties in setting yardstick for qualitative indicators.
Article (2): The Economics of Well-Being
By Justin Fox, Harvard Business Review
In this article, the author has brought up the use of Gross Domestic Product (GDP) as an economic indicator to measure the standard of living of a country. Ever since WWII, GDP has been the key means of measurement of a country’s economic performance.
However, at the present day, economists and political leaders have shifted their attention away from GDP. Instead, alternative indicators are being considered to provide a more accurate depiction of a country’s living standard. Apart from the typical Human Development Index (HDI), which was set by the United Nations, Bhutan’s emphasis on the abstract-sounding Gross National Happiness (GNH) has caused a paradigm shift in how countries should measure living standards.
In short, we cannot rely on GDP as the sole indicator to measure standard of living of a country. The non-material aspects of life, like the emotional aspects of happiness and sense of security, are to be factored into the assessment of a country’s living standards.
Article (3): What is standard of living like in Singapore?
Article (4): Is real income per capita a good indicator for standard of living?
Article (5): Why must we use qualitative economic indicators to measure standard of living?
Article (6): What are the non-material aspects of standard of living?
Article (7): Are qualitative aspects of standard of living accurate in measuring standard of living?
Question: Based on the featured articles, explain how governments can measure the material and non-material aspects of standard of living in a country.