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Standard of Living

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Economics - National Income, the Standard of Living and Economic Well-Being

Economics - National Income, the Standard of Living and Economic Well-Being


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  • my solution for recession is universalisation, means evaluate all assets of universe and then apply necessary sum of new currency (Zik=100$) to pay all debts and to buy off all taxes from national governments ....
    of course for this we need adequate entity, i see on horizon only myself as the secular and universal, legal and official The God, recognised by UN and with contracts with all national states governments,
    of course i invite you all to create a fresh new account at google, free, but with my data: universal identities names and universal residence, like this: Zababau Ganetros Cirimbo Ostangu zaqaqef@gmail.com ogiriny64256142, ( you can create this one but then inform me), access to account i have to have because this is divinating universalisation, but you can open it for all, i simply have to arrange it to adapt to paradigm, isn't it
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  • adapt to new changes and modifications in the arrangement of the history
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  • my solution for recession is universalisation, means evaluate all assets of universe and then apply necessary sum of new currency (Zik=100$) to pay all debts and to buy off all taxes from national governments ....
    of course for this we need adequate entity, i see on horizon only myself as the secular and universal, legal and official The God, recognised by UN and with contracts with all national states governments,
    of course i invite you all to create a fresh new account at google, free, but with my data: universal identities names and universal residence, like this: Zababau Ganetros Cirimbo Ostangu zaqaqef@gmail.com ogiriny64256142, ( you can create this one but then inform me), access to account i have to have because this is divinating universalisation, but you can open it for all, i simply have to arrange it to adapt to paradigm, isn't it ......
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
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  • 1. National Income, the Standard of Living and Economic Well-Being
    A2 Macro Economics
  • 2. GDP and GNI – The Difference
    GDP – total value of income / output within a nation’s boundaries
    Gross National Income (GNI) measures the final value of income flowing to domestically-owned factors of production wherever they are located
    GNI = GDP + Net property income from abroad (NPIA)
    Gross National Income per capita = Gross National Income / Total Population
  • 3. Remittances and GNI
    Remittances are transfers of money across national boundaries by migrant workers
    Inflows of remittance income can have a major effect on the GNI of many of the world’s poorer countries
    Top 10 remittance recipients in 2010 (billions): India ($55.0bn), China ($51.0bn), Mexico ($22.6bn), Philippines ($21.3bn),
  • 4. Measuring The Standard of Living
    The baseline measure is real national income per capita
    Gross National Income (GNI) divided by the total population
    This gives us a measure of average income per head of population
    Real national income per capita rises when real national output grows faster than population over a period of time
  • 5. Real GNI per capita for Brazil
  • 6. The path of rising income for the BRIC nations
  • 7. Putting the change in UK per capita incomes into context
  • 8. Difficulties in measuring living standards
    Limitations of GDP as a measure of material “well-being”
  • 9. “...trying to run a complex society on a single indicator like Gross National Product is literally like trying to fly a 747 with only one gauge on the instrument panel……
    ……imagine if your doctor, when giving you a full medical check-up, did no more than check your blood pressure”
    Hazel Henderson (economist)
  • 10. Limitations of National Income Accounts – Problems of Accuracy
    National income accounts have numerous limitations:
    Problems of measurement
    The shadow economy (i.e. all unrecorded income & spending)
    Non-monetised transactions (barter, non-marketed output)
    Risk of double-counting in the calculation of GDP by output
    Errors in inflation / cost of living measures lead to further errors when calculating real income/output per head
    Dubious accuracy of the population statistics
  • 11. How Big is the Shadow Economy?
    Estimated that in 2010 the UK government lost over £40 billion of unpaid taxes
    The shadow (black) economy means that official GDP data understates true living standards in the UK
  • 12. Limitations of GDP (2) – Problems of Interpretation
    Inequalities in income and wealth between households
    Average incomes may rise but relative poverty increase
    Regional differences in GDP per head and other indicators
    Differences often greater within regions rather than between
    Externalities need to be considered
    Economic welfare can diverge from social welfare
    Negative externalities can add to official GDP – but clearly do not improve social welfare (e.g. Cost of cleaning up pollution)
    Tax burdens / quality of public services
  • 13. Income Inequality in the UK
  • 14. Measuring inequality using the Gini Coefficient
    The Gini coefficient condenses the entire income distribution for a country into a single number between 0 and 1
    The higher the number, the greater the degree of income inequality.
    A value of 0 corresponds to the absence of inequality, all individuals have the same household income
    A value of 1 corresponds to inequality in its most extreme form, with a single individual having all the income in the economy
    The value for the Gini-coefficient varies enormously across different countries – the next chart tracks what has happened to the coefficient for the UK since the mid 1990s
  • 15. The Gini Coefficient for the UK
  • 16. Gini Coefficients for a selection of countries
  • 17. Another way of looking at inequality
  • 18. More problems of Interpretation with UK GDP Stats
    The changing quality of goods and services – not always reflected in market prices
    The balance of output between consumption and Investment – affecting living standards both today and in the future
    Working hours and sacrifice of leisure hours, impact on family life
    Valuing life expectancy and valuing years of healthy life expectancy
  • 19. Indicators of Quality of Life
    The government has introduced an annual assessment of quality of life in the United Kingdom
    Range of economic and social indicators are used including
    Economic growth
    Social Investment in public assets
    Employment levels
    Health indicators
    Education and training
    Housing quality
    Environmental indicators
    Transport
    Land use
    Waste and waste disposal
  • 20. Measuring The Standard of Living
    Other measures give a broader assessment of living standards
    Environmental Indicators (sustainable economic welfare)
    Social (Quality of Life) Indicators
    Human Development Index (United Nations)
    Index of Sustainable Economic Welfare (ISEW)
    Index of Economic Welfare
  • 21. GDP and the Environment
    “If a truckload of toxic chemicals spills somewhere, the money spent cleaning it up is added to the GDP. If nearby residents can no longer use their wells for water, their expenditures on bottled water is added to GDP. If they become sick from exposure to the substance, their medical costs are also added to the official measure of well-being”
    Mike Nickerson (Sustainability Project, Ontario)
  • 22. Human Development in Focus
    “Human development is the expansion of people’s freedom to live long, healthy and creative lives; to advance other goals they have reason to value; and to engage actively in shaping development equitably and sustainably on a shared planet. People are both the beneficiaries and the drivers of human development, as individuals and in groups”
    HDR Report, November 2010
  • 23. United Nations Human Development Index
    The HDI is a composite measure of economic and social welfare that has three main components
    Knowledge: First an educational component made up of two statistics – mean years of schooling and expected years of schooling
    Long and healthy life: Second a life expectancy component is calculated using a minimum value for life expectancy of 25 years and maximum value of 85 years.
    A decent standard of living: The final element is gross national income (GNI) per capita adjusted to purchasing power parity standard (PPP).
  • 24. Improvements in Mortality Rates
  • 25. Limitations of the Human Development Index
    HDI notably fails to take account of qualitative factors, such as cultural identity and political freedoms
    The HDI figure – takes no account of income distribution. Inequitable development is not human development.
    PPP values change quickly and are likely to be inaccurate or misleading
    The 2010 edition of the Human Development Report marked the launch of a new Inequality-adjusted HDI and also a Gender Inequality Index and a Multidimensional Poverty Index
  • 26. Index of Sustainable Economic Welfare (ISEW)
    ISEW is devised by the New Economics Foundation and further developed by Friends of the Earth
    ISEW adjusts the basic GDP data for
    Future Damage / Loss of Natural Capital
    Costs of Environmental Damage
    Defensive Expenditures
    Adjusted for Service Value of Consumer Expenditure
    Add Non-Defensive Public Expenditure
    Services from Domestic Labour
    Income Inequality
    The annual growth of Sustainable Economic Welfare per capita is often lower than growth of real GDP per capita
  • 27. GNI per capita - Making a PPP adjustment!
  • 28. Adjusting for a purchasing power parity standard
    National income data can be used to make cross-country comparisons of living standards
    Convert each nation’s GDP data into a common currency (normally the US dollar)
    Adjustment made to reflect differences in the cost of goods and services in each country
    The purpose of doing this is that the purchasing power of each unit of currency has (approximately) the same purchasing power
  • 29. Limitations of the PPS adjustment process
    The actual exchange rate for a country is unlikely to be at purchasing power parity levels
    Not all output is traded internationally – some goods and services are produced only for domestic consumption
    Differences in degree of competition and monopoly power in local and national markets affect relative prices
    Local indirect taxes and tariffs cause differences in the cost of living
  • 30. Economic Well-Being
    A broader measure of our economic health and happiness!
    Involves a degree of subjectivity about what to include and the weights given to each aspect
    Health outcomes
    Work-life balance
    Financial and job security
    Educational outcome
    Environment
    Community
    Life Satisfaction
  • 31. Should we have a new style of happiness index?
  • 32. tutor2u
    Keep up-to-date with economics, resources, quizzes and worksheets for your economics course.