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“Standard of living” should not equate to “amount of spending”.

When I sat down to write an article on the countries with the highest standard of living, I thought it would be easy. But, how do you define “standard of living”?

Merriam-Webster.com says it means:

1 : the necessities, comforts, and luxuries enjoyed or aspired to by an individual or group
2 : a minimum of necessities, comforts, or luxuries held essential to maintaining a person or group in customary or proper status or circumstances

The World Bank says:

The level of well-being (of an individual, group or the population of a country) as measured by the level of income (for example, GNP per capita) or by the quantity of various goods and services consumed (for example, the number of cars per 1,000 people or the number of television sets per capita).

The Merriam-Webster definition is rather ambiguous – it depends what you define as “necessities” and “comforts” – but the World Bank definition seems unashamedly material: that standard of living is related to how much money you have and what you spend it on.

Yet many different agents have come up with many different ways to define, measure, and rank standard of living, and they aren’t all based purely on economics. Here are four methods, with the top ten ranked countries under each system.

1. Gross Domestic Product

Gross Domestic Product is the total market value of all the goods and services produced in a country in a year. Since our prevailing world view is still stuck on more money = better life, GDP is often used as a quick and dirty way to infer a country’s standard of living.

Photo by loungerie

This is, to use a technical term, complete crap. Not only can money not buy happiness, but not all spending is good spending. Clearing up a pesky oil spill or sustaining multiple wars in foreign lands might be great for expenditure and therefore GDP, but doesn’t mean the country or its people are any ‘better off’ than they were beforehand.

There are tons of other reasons why GDP is not a good indicator of standard of living – for example, it doesn’t factor in wealth distribution, or the negative effects of higher production – but it’s regularly and easily measured, and relatively easy to compare across countries. For now, at least, it’s here to stay.

GDP top 10 in 2010 according to the IMF (GDP given in millions of $):

What people really want is to live long, fulfilling lives, not just to be filthy rich.
    1. United States (14,624,184)
    2. China (5,745,133)
    3. Japan (5,390,897)
    4. Germany (3,305,898)
    5. France (2,555,439)
    6. United Kingdom (2,258,565)
    7. Italy (2,036,687)
    8. Brazil (2,023,528)
    9. Canada (1,563,664)
    10. Russia (1,476,912)
2. Human Development Index

The Human Development Index was instituted in 1990 as a way to assess development in terms of human wellbeing as well as economics. It’s a composite statistic that takes into account health, education, and income.

It’s used by the UN Development Programme each year in its Human Development Reports to produce a sort of league table of countries, each of which are placed in one of three divisions: developed, developing, or underdeveloped. But country rankings are relative rather than absolute, and there is no ecological dimension to the index.

Photo by black-snow

HDI top 10 in 2010 according to the UN:

    1. Norway
    2. Australia
    3. New Zealand
    4. United States
    5. Ireland
    6. Lichtenstein
    7. Netherlands
    8. Canada
    9. Sweden
    10. Germany
3. Satisfaction With Life Index

Developed by a psychologist at the University of Leicester, the Satisfaction With Life Index attempts to measure happiness directly, by asking people how happy they are with their health, wealth, and education, and assigning a weighting to these answers.

This concept is related to the idea of Gross National Happiness that came from Bhutan in the 1970′s. Although it may sound like a country-wide gurning contest, it was actually a casual remark by the king that was taken seriously by the Centre for Bhutan Studies, which set about designing a survey to measure the population’s well-being. The idea is that material and spiritual development should take place side by side, underpinned by sustainable development, cultural values, conservation, and good governance.

Satisfaction With Life Index top 10 in 2006 :

Photo by -Snugg-

    1. Denmark
    2. Switzerland
    3. Austria
    4. Iceland
    5. The Bahamas
    6. Finland
    7. Sweden
    8. Bhutan
    9. Brunei
    10. Canada
4. Happy Planet Index

The Happy Planet Index was introduced by the New Economics Foundation in 2006. The premise is that what people really want is to live long and fulfilling lives, not just to be filthy rich. The kicker is that this has to be sustainable both worldwide and down through the generations.

The HPI is calculated based on life satisfaction, life expectancy, and ecological footprint. It doesn’t measure how happy a country is, but how environmentally efficient it is to support well-being in that country.

In other words, if people are happy but they’re guzzling more than their fair share of natural resources, the country will not have a high Happy Planet Index. But if people are happy and have a medium environmental impact, or are moderately happy and with a low impact, the country’s score will be high.

Happy Planet Index top 10 in 2009:

    1. Costa Rica
    2. Dominican Republic
    3. Jamaica
    4. Guatemala
    5. Vietnam
    6. Colombia
    7. Cuba
    8. El Salvador
    9. Brazil
    10. Honduras

COMMUNITY CONNECTION

What do you think of these measurements of standard of living? Do any of the countries in the top tens surprise you? Share your thoughts in the comments below.

Activism + Politics

 

About The Author

Nick Rowlands

Nick lived in Egypt for six years, working as a tour leader, EFL teacher, city guide editor, and online guidebook writer. He's currently in San Francisco searching for his centre. He (kinda sporadically) blogs at Delicious Chaos, and you can follow him on twitter.

  • http://parlezvoussaywhat.wordpress.com Emily

    A country’s GDP is also a poor indicator of standard of life because it doesn’t take population into account…which is why it’s rarely used for that purpose. If you’re talking about standard of living in a country, the metric to start with is really per capita GDP, adjusting for purchasing power parity, giving you a pretty decent idea of what the average person can buy/afford. While money certainly can’t buy happiness, it can buy health care, food and lodging, which are certainly things that make me happy.

  • http://matadortravel.com/travel-community/nickrowlands Nick Rowlands

    Hey Emily,

    Thanks for your comment. I considered putting in GDP adjusted for PPP, but decided against it in the end. It was interesting though to see how different the list of top 10 GDP (PPP) countries was for 2010 compared to the current currency exchange rate list I included.

  • http://vagabonderz.com Carlo Alcos

    My money is on the happy planet index. What good is it to be happy at the expense of our environment? Balance is the key, and that one seems the most balanced of any of them.

  • http://kristin5683.wordpress.com/ Kristin Conard

    So America has money, but can’t crack the top 10 for happiness – interesting.

  • http://www.travelmedianinja.com joshywashington

    on another note I heard that 25% of Americans say they have to confidants, no one they can talk to about life’s joys and tragedies…I think the lack of happiness in the West is due at least in part from the isolation that our society has wrought upon the individual.

    • http://matadortravel.com/travel-community/nickrowlands Nick Rowlands

      Agreed. Divide and conquer?

  • http://www.crazysexyfuntraveler.com crazy sexy fun traveler

    Interesting! I’m surprised that ‘satisfaction with life index in 2006′ says there r many countries from Northern Europe with little sunshine, while it’s been always said people r not happy without sun.

    • http://matadortravel.com/travel-community/nickrowlands Nick Rowlands

      A criticism that has been leveled at the HDI is that it doesn’t measure human development so much as how Scandinavian your country is. I wonder if the Satisfaction with Life Index has a similar inherent bias?

  • http://www.gorgeousworld.net/ Kevin

    So everybody in Costa Rica is happy, i would love to visit that place someday.

  • http://julesfredrick.wordpress.com/ julesrules

    So the US ranks high in GDP and HDI, and doesn’t even rank in life satisfaction or happiness. I really feel that our political divisiveness has a LOT to do with that, plus the fact that our healthcare and care of our poor is crap. I spent time in Norway this year, and the Norwegian people were unbeliveably upbeat despite rain and lack of sunshine. I’d trade that any day.

  • Earthman

    If the Happy Planet index places Cuba in the top 10 it must be profoundly flawed. This is a country where people’s lives are spent scrounging daily for their next meal, and the police state tracks every word and movement. Professionals resort to prostitution to make ends meet, medical care is practically nonexistent for lack of the most basic supplies, and the education system amounts to political indoctrination for all.

  • http://www.p90xtestimonials.com/ kara

    Standard of living normally can’t be measured. But in case if we have the comparision criterion then we can have some idea on what makes a good living.

  • http://www.greenygrey.co.uk Marc Latham

    Nice article, yes, I think there’s more to life and happiness than money.

    Bruce Parry’s got a programme in the Arctic on the BBC at the moment, and he said the Inuit used to have one of the lowest suicide rates, but after development increased they now have one of the highest.

  • http://www.idcredit.org/ Adam Smith

    Measuring standard of living is something, which might vary from person to person. But by and large these suggestions can help people in estimating the standard of living.

  • http://MasaiMaraMarathon.org Masai Mara Marathon

    Nice blog post…
    Hopefully Kenya will rise to top of these indexes in a few years. :-)

  • Aidenwood

    Hey, I’m really lucky to read your post.  I did a search on the topic and found most peoples will agree with your blog.
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  • ToBeOrNotToBeHappy

    The happy planet index seems to say “live within your means and be happy with what you have”

  • Celestine Edem

    Can someone help to explain more abt standard? Nd four types of standard. Primary standard, secondary standard, workin standard nd international standard.

  • Celestine Edem

    Money is nt everytin. I cn wait 2 visit us. 2 find out more information.

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