Worksheet on GDP and Standard of Living (Student Version)
To see whether the level of GDP adequately reflects the standard of living of an economy, we are going to compare 4 countries. We will look first at four developed countries, and see what factors other than GDP may affect their quality of life. Work through the following steps to gather the information:-
Step 1 - What is meant by standard of living?
The table below has a number of variables that will affect the Standard of living of an economy. Put a tick in the box that you think is most appropriate for each variable to give the economy a higher standard of living. e.g. if you think a low literacy rate will lead to a higher standard of living, then tick "low level required" under literacy rates.
| High level required | Low level required | ||
| GDP | |||
| Health | Infant mortality | ||
| Life expectancy | |||
| Education | Literacy levels | ||
| Unemployment | |||
| Transport | Transport expenditure | ||
| Transport infrastructure | |||
| Defence expenditure | |||
| Electricity consumption | |||
| Communications | No. of telephones per person |
In some cases there is not an absolutely correct answer. Where this may be the case, write briefly why you have selected the alternative you have. Check your answers to this with your teacher, and when you are satisfied what factors may affect the standard of living and why, go on to Step 2.
Step 2 Gathering the information
We now need to be able to compare the countries. The countries to be compared are Australia, UK, USA and Japan. From the Internet sources given below the table, try to fill in all the relevant figures:-
| Australia | UK | USA | Japan | ||
| GDP * | |||||
| Health @ | Infant mortality | ||||
| Life expectancy | |||||
| Education @ | Literacy levels | ||||
| Unemployment @ | |||||
| Transport * | Transport expenditure | ||||
| Transport infrastructure | |||||
| Defence expenditure @ | |||||
| Electricity consumption @ | |||||
| Communications @ | No. of telephones per 1000 people |
* Available from Bized - the Penn World Data Tables (http://www.bized.co.uk/dataserv/penndata/pennhome.htm)
@ Available from the CIA world factbook (http://www.odci.gov/cia/publications/95fact/index.html)
Hint: Not all the data will necessarily be in exactly the form you want it, so think carefully what you may need. e.g. the World fact book will give the total number of telephones in a country, so to get the no. of telephones per 1000 people, you will also need to collect the population figures for each country. Check also that the data is consistent between countries.
Once you have all the data, go on to Step 3 -
Step 3 Comparing the information.
There are various ways to compare the above information. Put the following techniques in the order you think would be most appropriate, with no.1 as the best and no.5 as the worst.
| Technique | Order | Reason |
| Looking at the figures | ||
| Creating a standard of living index | ||
| Graphing the results | ||
| Giving each figure a "score" | ||
| Creating a weighted standard of living index |
Find out about a weighted standard of living index by using the "Index Numbers" worksheet (http://www.bized.co.uk/learn/economics/macro/indnos/student.htm).
If you are not sure what any of these mean - check with your teacher first. Now onto Step 4 -
Step 4 Ordering the countries by standard of living.
Carry out whichever technique you chose in Step 3, and fill in the table below.
| Country | Ranking by GDP level | Ranking by Standard of living level |
| Australia | ||
| UK | ||
| USA | ||
| Japan |
Was the ranking very different? If it was, what factors were the most important in changing it?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
Step 5 Other factors affecting standard of living
From the same Internet sources, what other information is available that may be useful in analysing the standard of living of an economy?
__________________________________________________________________________________
__________________________________________________________________________________
The World Bank Social Indicators of Development (http://www.ciesin.org/lqi-is/tabledata.html) has many more variables available. Click on the link, and fill in on the table below other figures to add to your Standard of Living measure.
| Country | Variable | Figure | Good/ bad?? |
| Australia | |||
| UK | |||
| USA | |||
| Japan |
Step 6 Comparison with other Standard of Living measures.
In the Penn World Data Tables on Bized, there is another Standard of Living measure. Fill this in in the table below, and compare it with your own rankings.
| Country | Ranking by GDP level | Ranking by your Standard of living measure | Ranking by Bized / Penn Standrad of living measure |
| Australia | |||
| UK | |||
| USA | |||
| Japan |
The Penn world data table measure of Standard of living is calculated by taking the level of consumption expenditure, adding the level of government consumption (less military expenditure). Why might this not be a good measure of standard of living in:-
the short-term ________________________________________________________?
or the long-term ______________________________________________________?
Step 7 Comparing different countries.
Now try the same exercise as above, but for different countries. Remeber the key sources of information here are:-
Bized Penn world data tables (http://www.bized.co.uk/dataserv/penndata/pennhome.htm)
CIA world factbook (http://www.odci.gov/cia/publications/factbook/index.html)
World Bank Social Indicators of Development (http://www.ciesin.org/lqi-is/tabledata.html)