Real GDP Per Capita and the Standard of Living

They say what matters most in life are the things money can’t buy.

So far, we’ve been paying attention to a figure that’s intimately linked to the things money can buy. That figure is GDP, both nominal, and real. But before you write off GDP as strictly a measure of wealth, here’s something to think about.

Increases in real GDP per capita also correlate to improvements in those things money can’t buy.

Health. Happiness. Education.

What this means is, as real GDP per capita rises, a country also tends to get related benefits.

As the figure increases, people’s longevity tends to march upward along with it. Citizens tend to be better educated. Over time, growth in real GDP per capita also correlates to an increase in income for the country’s poorest citizens.

But before you think of GDP per capita as a panacea for measuring human progress, here’s a caveat.

GDP per capita, while useful, is not a perfect measure.

For example: GDP per capita is roughly the same in Nigeria, Pakistan, and Honduras. As such, you might think the three countries have about the same standard of living.

But, a much larger portion of Nigeria's population lives on less than $2/day than the other two countries.

This isn’t a question of income, but of income distribution—a matter GDP per capita can’t fully address.
In a way, real GDP per capita is like a thermometer reading—it gives a quick look at temperature, but it doesn’t tell us everything.

It’s far from the end-all, be-all of measuring our state of well-being. Still, it’s worth understanding how GDP per capita correlates to many of the other things we care about: our health, our happiness, and our education.

So join us in this video, as we work to understand how GDP per capita helps us measure a country’s standard of living. As we said: it's not a perfect measure, but it is a useful one.

Help us caption & translate this video!

[derekofbaltimore]

thumbs up because he took the time to point out the negatives

[blanka]

it's so refreshing how slowly he speaks compared to most people doig econ videos. it's almost like he doesn't make me want to jump out a window.

[nik]

In this video - which was made in 2015 - you stated that Nigeria had 80% of its population living on less than 2 dollars a day, which was unforunately correct. Today, only 5 years later, that number is around 43%, which means that it's down almost 50% of what it was! In just 5 years, that's an incredible progress!

Thansk for the video, awesome!

[mushahid]

one cannot explain the concept better than this. You guys are doing a great great job !

[rajcherian]

loved the simplicity of your presentation. An average person can understand it. I am a CFP and I had difficulty in explaining as simple as this to my clients, as simple as what you just did, thanks

[ranjavirtaila]

These videos are very good for people whose English is 2nd language. I really appreciate slow and very understandable speaking.

[ankitkumar-xlxq]

today i watched your videos and now, I think I have no need to take classes in school.
Thanks for making such videos.

[dangiscongrataway]

Thank you, my macro economics course starts soon and I understand the concepts well thanks to these videos.

[lindascoon]

Economists graph everything, even happiness. Where is the love graph

[GlendaPeru]

well there is one more thing: as you said GDP can reflect how happy we are, if we compare how much more can we afford, and this will show, how much better the economy is. And sure, consumerism is what thrives the economy. But we are in a different status quo now... the more we spend, the more we produce, the more market competition... deteriorates our planet more and more. This is an "older" video... I am looking forward to see more videos and if the environment issue can fit (could be added) into an equation. Thank you, awesome videos, well explained! I am working on my thesis for my master studies and GDP is a big part of it...

[RichardsWorld]

Some prince in Nigeria still owes me a million dollars plus the one thousands dollars I sent him through Western Union. 10 years later I still didn't get my one million dollars!

[akhilkhare]

I really enjoyed this video, since I understood complicated terms in a short span of time!

[krishnachaitanya]

There ain't any channel in the youtube that can explain the economics as interesting as you do.Thanks for all your quality videos.👍

[dailtonluizmagnagojunior]

The speed of the explanation is perfect, the images and graphs used are really helpful, and the words used are simple and clear, which helps a lot for non-native English speakers.

[sanjuanagranado]

y'all are awesome! I use your videos EVERYDAY in my classes.

[sufyansuleiman]

This is the best explanation one can ask for, very educative, basic, without complications and on point . Thank you

[fredericostuckenbruck]

Excelent video extremely clarifying tumbs up👍

[rajatsharma]

Your videos are really good. Educational, keep doing the good work and also start making country-specific videos as well.

[memo]

I'm so happy these videos exist. My textbook is amazing and designed for self-studying but it really skimmed that part about how GDA = higher standards of living. It stated it but didn't attempt any convincing of it. Maybe more convincing would be available in later lessons, Idk. What I know for sure, however, is that now I can finally pass the lesson I got stuck in with a light and a satisfied heart.

[peaceseeker]

Thank you Mr. Alex for this enlightening video. Thank you very very very and very much!!