Standard Of Living And Well Being Flashcards
What does the standard of living measure
Our material welfare
What is the baseline measure
Real national output per head of population or real GDP per capita
What is real income per capita
An inaccurate and insufficient indicator of living standards
What is income per capita
A way of measuring the standard of living for the inhabitants of a county
What is real GDP per capita
Real income per head of population
What is real disposable income
Income after dedication of taxes + addition of benefits
GDP and GNI per capita for the U.K.
In recent years U.K. GNI per capita has fallen below GDP per capita because the net flow of investment income has become negative
Problems with using national income statistics to measure living standards
- underestimated (shadow economy)
- some countries don’t update data
- regional variations
- inequalities of income and wealth
- imbalances between consumption and investment
- changes in life expectancy
- value of non-marketed output
- innovation and development
- environmental considerations
- defensive expenditures
In 2014 how much income was generated for the British economy in 2013
£4.4 billion
Difference between economic growth and economic welfare
Economic growth is sustained growth of real GDP over time whereas economic welfare is a broader measure of well-being (social + economic)
What does economic wellbeing cover (indicators)
- GDP per capita
- household spending per capita
- median household income
- household net wealth
- unemployment rate
- financial situation of households and feeling of security
Why is it better to look at the median household income rather than the mean
It is reflective of progress in the middle of the income distribution (can focus on inclusive growth that generates wider benefits)
Links between real incomes and subjective happiness
Traditional economic theory assumes a positive relationship
What is the easterlin paradox
That life satisfaction does rise with average income but only up to a point
When do living standards improve
When an economy is able to sustain a rise in real per capita incomes over the LR and when the benefits of growth are widely spread
