Standard of Living: Definition & Measurement

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  • 0:00 Standard of Living Defined
  • 0:28 General Factors
  • 1:00 Economic Factors
  • 2:04 Problems with Economic…
  • 3:18 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

You've probably heard about the concept of standard of living and how it varies between different countries. In this lesson, you'll learn about what standard of living is and how it can be measured.

Standard of Living Defined

Standard of living can be thought of as a measure of the quality of life or level of material prosperity enjoyed by individuals, a specific demographic group, or a geographic region such as a country. In economics, the standard of living is usually used to determine the relative prosperity of the population of an entire country and is often compared to the standard of living that populations of other countries enjoy.

General Factors

Standard of living is a composite of different factors that are generally believed to enhance the quality of life of individuals in a population.

The following is a list of factors that are used to determine a country's standard of living:

  • Household income
  • General health of a population
  • Life expectancy of the members of a population
  • Availability and quality of housing
  • Level of crime
  • Access to health care
  • Access to education
  • Access to social services
  • Political freedom
  • Social freedom

Economic Factors

Determining a country's standard of living is really a complex art rather than an exact science because there are elements of it that are hard to quantify. For example, it is often presumed that living in a country with a democratic political system and a free press improves the standard of living, but this is not exactly easy to reduce to numbers. Consequently, economists typically try to simplify the measure by using only economic factors that are subject to measurement and mathematical calculation.

Economists often use per capita income as a measure of standard of living. Per capita income is simply the average amount of money earned per person in the country. Generally speaking, a higher per capita income allows people to buy more goods and services, increases access to education, and increases access to healthcare, all of which increases quality of life and life expectancy. Higher per capita income also means that a country has a higher tax base to support social services, infrastructure, public education, and other investments that can further improve the population's standard of living.

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