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Discuss to what extent a GDP per head is the best measure of standards of living.

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Introduction

Discuss to what extent a GDP per head is the best measure of standards of living. GDP per head could be good for measuring the standards of living but to a certain extent, for example if the GDP per head is counted across London or some other large capital city then take the average then it is obvious that it is going to be a number that is not going to be telling the complete truth and probably lowering the standards of living for many parts of that city, so I think that for the first thing is that you actually have to measure the GDP per head either by different boroughs or it might work where most of the people have ...read more.

Middle

be bringing down the average and as in most towns there are more low paid people than there are extremely rich people. This way is limited due to the fact that you have to know how much money is spent on consumption of goods and it is moderately hard to keep track of everything that you buy and how much money you spend on things. There are limitations like non-market output like subsistence farming, the shadow economy like the black market in a country, data collection could be limited because of internet sales and awkward exchange rates which could interfere. There are different ways of measuring the standards of living of the people and that could be in a similar way to getting the GDP per head but this one takes only one factor of the GDP and that's income. ...read more.

Conclusion

Therefore you can see that if I try to use different methods to work out the standards of living it is still practically the same way as working out GDP per head and therefore you can say that it is the best way of working out the standards of living but to an extent, and this I mean by the fact that it is virtually impossible to work out all the costs of living. I think that working out the income for an average person is easier than their consumption, because it is very hard to keep track of everything that you buy. Peter Tsarkov ...read more.

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