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Classifying Wealth and Standards of Living

Classifying Wealth and Standards of Living

How should we classify wealth and standards of living in different parts of the world?

When we talk about the relative wealth of a nation we need to be careful about how we calculate this wealth and what assumptions we make about how this relates to standards of living. Countries don’t always have a similar GNP (Gross National Product) and HDI (Human Development Index). Cuba, for instance, has a low GNP but a high HDI: not much wealth is generated but many people are relatively content and have access to good health services.

We should also take care not to confuse standard of living and quality of life. Some developed nations will have a high standard of living but a low quality of life. That’s because quality of life includes things like the amount of freedom our children have to play, which is often low in developed countries.

Many quality-of-life indicators are also affected by the fact that people in developing countries may have lower expectations to those in the developed ones; for instance many people in Africa would see having clean drinking water as something to be happy about, whereas in Europe we take it for granted.

standard of living

This is not to say that people in the developing world don’t want the same as other people. Many people in poorer parts of the world work incredibly hard to try to make their environment better; they improve their homes, work hard on the land, fight government corruption and work with both government, multi-national organisations (like the United Nations) and non-governmental organisations (NGOs, mainly charities) to make things better for their children.