Standard of Living

The standard of living is a measure of economic welfare. It generally refers to the availability of scarce goods and services, usually measured by per capita income or per capita consumption, calculated in constant dollars, to satisfy wants rather than needs. Because the well-being that living standards are supposed to measure is an individual matter, per capita availability of goods and services in a country is a measure of general welfare only if the goods and services are distributed fairly evenly among people. If income distribution is very uneven, then despite high per capita availability of commodities, large numbers of persons may have a very low standard of living and others a very high standard - valid comparisons can be made only among reasonably homogeneous groups. Improvement in standard of living can result from improvements in economic factors such as productivity or per capita real economic growth, income distribution and availability of public services, and noneconomic factors, eg, protection against unsafe working conditions, clean environment, low crime rate, etc.

GDP per capita is a commonly used measure of the standard of living but not necessarily an accurate one because, among other reasons, it does not distinguish between consumer and capital goods; it does not take income distribution into account; it does not take account of differences in the economic goods and services that are not measured in GDP at all; it is subject to the vagaries of translating income measures into a common currency (see NATIONAL INCOME) and it fails to take into account differences of tastes among nations. According to the OECD, Canada's 1997 GDP per capita (measured in $US) was about $21 900, compared with about $29 325 for the US, $23 100 for Sweden and $21 100 for the UK.