Purchasing power parity (PPP) is a method of estimating national income and cost of living between countries. It compares the amount of currency required to buy the same goods and services in different countries. PPP is used as an alternative to GDP to compare living standards, as it accounts for differences in cost of living. There are challenges to accurate PPP measurement, such as variability in goods baskets and difficulty measuring quality differences between countries. PPP is calculated by comparing the price of a common product in different currencies and countries.