Final answer:
The standard of living is a measure of the wealth, comfort, and necessities available, and is determined by considering income, employment, literacy, life expectancy, and housing. GDP per capita is a common economic indicator, but it doesn't capture all aspects affecting well-being. A more holistic view includes factors like health, education, and inequality metrics.
Step-by-step explanation:
The term standard of living refers to the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area. It encompasses a wide variety of factors such as income, employment, class disparity, literacy rates, life expectancy, poverty rates, and the affordability of housing. A higher standard of living typically indicates that individuals in a society can afford essentials like housing and personal transportation, as well as enjoy leisure activities such as vacations.
To determine if the standard of living is improving or declining, economists and policymakers look at several indicators. While Gross Domestic Product (GDP) per capita is a common measure, it does not fully capture all aspects of the standard of living. Other factors like human health, environmental quality, leisure time, and income distribution are also important. The fear that GDP growth may not truly reflect improvements in the standard of living is mitigated by the evidence suggesting that overall well-being tends to rise with economic growth. Nevertheless, considering a range of indicators provides a more holistic view of the standard of living.
Comparing the standard of living across different countries involves looking beyond GDP and considering additional metrics such as the Human Development Index (HDI), the Gini coefficient for income inequality, and measures of educational attainment, health outcomes, personal security, and access to technology. These metrics help paint a more comprehensive picture of the quality of life people experience.