Living Standards Report

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Living Standards Report

Gross Domestic Product (GDP) is defined as the value of all final goods and services produced within a nation in a given year, plus income earned by its citizens abroad, minus income earned by foreigners from domestic production. The GDP figure for the USA was $36,300 whilst the UK's was only $24,700. I have chosen 6 measures to prove that the GDP figure does not represent living standards but just shows what the average income is. These measures are the Gini index, the rate of literacy, the infant mortality rate, life expectancy, unemployment rate and the death rate.

The Gini index is calculated from the Lorenz curve, in which cumulative family income is plotted against the number of families arranged from the poorest to the richest. The index is the ratio of the area between a country's Lorenz curve and the 45 degree helping line to the entire triangular area under the 45 degree line. The more nearly equal a country's income distribution, the closer its Lorenz curve to the 45 degree line and the lower its Gini index, e.g., a Scandinavian country with an index of 25. The more unequal a country's income distribution, the farther its Lorenz curve from the 45 degree line and the higher its Gini index, e.g., a Sub-Saharan country with an index of 50. If income were distributed with perfect equality the index could by zero; with perfect inequality, 100. In the UK the Gini index was 36.1 (1991) whilst in the USA it was 40.8 (1997).
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This shows that the UK has a better income distribution and so there isn't that big a gap between the lowest 20% and the highest 20% compared with the USA.

The literacy rate is the amount of people, aged 15 or over, who have completed 5 years or more of schooling. In the UK the rate was 99% and in the USA the rate was 97%.

This means that the UK's population is more skilled and trained than the USA's population. The USA's figure could be affected by the population being more spread out or ...

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