what are the problems of trying to compare living standards

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  1. What are the problems in trying to compare the living standards between countries

When comparing living standards between or within countries, many problems can occur while considering factors that are constantly changing in the countries which may determine the living standards of the country. Factors that may effect a countrys living standards for example GDP this comes from the output of different industrial sectors: the primary, secondary and the tertiary. This can be treated as aggreated supply. GDP can then be divided by the countries population to produce GDP per capita which gives an average income value, but this statistic can be very misleading and can disguse important differences e.g resulting in hidden economy. We assume that a higher GDP per capita shows that living standards are better in one country than another. But this is where the problems arise, two countries can have similar GDP’s per capita, but one might have a small elite of very high-income earners, with a huge amount of people in dire poverty, while the other country may have fewer extremes and a very large proportion of middle-income families. So the Economic deprivation in large sections of the community can be hidden in the average creating a hidden economy.


National income statics are used to compare the living standards of different countries. Apart from the problem of excahnge rate fluctuations overtime between countries being compared, there are a number of other difficulties when making international comparisons.

There may be differences not only in the way national income is calculated but also in the reliabilty of the collected data. When comparing living stnadards between or within countries it may be essential to be aware of the population or income earners the main problem that occurs is the lack of people who are willing to take part in the survey or any data that is needed. This then erases a percentage of the population which are unknow which can make a difference while comparing in diverse areas of a country. In the UK this survey is called census.

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Also The two countries in question may have different climates. So for example, when comparing Greenland and Greece, Greenland may need to spend a higher proportion of it national income on heating and clothing in oder to achieve the same ‘quality of life’ as greece. Countries will therefore have different needs and tastes which cannot be readily taken into account when making international comparisons.

The two countries may provide other differences in ‘quality of life’ which are even more difficult to reflect in terms of a monetary value eg feeling of safety from attack, freedom to express ones ...

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