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Real GDP Per Capita and the Standard of Living

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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. Macroeconomics Course: http://bit.ly/1R1PL5x Ask a question about the video: http://bit.ly/1WJcJ5w Next video: http://bit.ly/1S1CxuA Help us caption & translate this video! http://amara.org/v/H04s/
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Text Comments (254)
Hakem Ali (6 days ago)
If you use some graphic programs such as After Affect, the video will be excellent.
Business Advisors (10 days ago)
Thanks alot, this is very helpful
rajat sharma (18 days ago)
Your videos are really good. Educational, keep doing the good work and also start making country-specific videos as well.
Thank you for your comment! We have some country-specific playlists. India: https://www.youtube.com/playlist?list=PL-uRhZ_p-BM6qwTvoo09a3ZB2WuZNQtr8 China: https://www.youtube.com/playlist?list=PL-uRhZ_p-BM4vSTK6gU6sLqA7lPDbZIe5 and more You can see these on our channel page. -Roman
Dangis Congrataway (22 days ago)
Thank you, my macro economics course starts soon and I understand the concepts well thanks to these videos.
Bhavesh Dangi (1 month ago)
Great video. Subscribed !
Tai (1 month ago)
Good video, however it's the governments that don't want to invest in research to find new international standards to quantify growth, they are happy to use one very old indicator. Venture capitalist Nick Hanauer and guest academics explain the real situation in the pitchfork economics podcast. It's as if they don't want the layman to easily discern what the real situation is so they can say overall growth continues, if we change anything (like add regulations to the free market) the whole system would collapse. But why shouldn't the UN introduce a process and definition that is more complex and more defined? It would benefit the greatest number of people by letting us know the true impact our government policy makers have had. The video is fine until he said "Growth in GDP per Capita USUALLY does indicate growth in everyone's income over time, including the incomes of the very poor". Such an ambiguous and misleading sentence. The pictograph isn't even fully annotated, anyway you would expect it to grow slowly over time. It would have grown exponentially faster if the markets were regulated to ensure inequality wasn't increasing and predominantly benefiting the corporations and the elite.
Peace seeker (1 month ago)
Thank you Mr. Alex for this enlightening video. Thank you very very very and very much!!
sub.scribe 01 (1 month ago)
Great video ! 👍
khairi Ibrahim (1 month ago)
You do great, thank you
D. (1 month ago)
Hi, average Joe here. Is it possible to derive with a more objective value of "GDP per Capita" by correlating it with an added variable called "Distribution of Wealth index"? Performing the most logically suitable math operation between both of 2 values will result in a more objective "GDP per Citizen" value - which is more useful for an average Joe. What did i miss, or maybe reinvented an already existing thing? I know there exists 2 more values of buying power, one is correlated with outside market, and one with inland market. These values are also pretty telling about the standards of living, though are a bit tricky to understand.
Hasran Aslan (1 month ago)
Breaf and clear explanation
Prashant Chavan (1 month ago)
More animation
Muhammad Bin Shahzad (1 month ago)
Very well done indeed. Thank you. :)
모모 (1 month ago)
The way you explained is much better than my professor. Now I have a better understanding of GDP. Thanks a million!!
Jay Double Gee (2 months ago)
So in other words don't be poor or you'll never get out of poverty. Got it.
kasunkt (2 months ago)
very white perception and very us biased they dont take other oecd countries against US because thats the best example .but its kinda hurt US EGO.
Nadir Khawaja (2 months ago)
Growth in GDP and GDP per Capita doesn't not necessarily mean there will be growth for all incomes over time. Its entirely possible for new wealth generated to be concentrated in the hands of a much smaller class.
Aaron Castillo (2 months ago)
Adjust Income Inequality
skeletorrobo (3 months ago)
Thanks for the explanation.
vinayak kanadal (3 months ago)
Nice sir
Conrad Strydom (3 months ago)
Great video, you explain the concepts so well it's incredibly easy to grasp.
junejuly532 (3 months ago)
You are better than the text books i read. Keep it up.
junejuly532 (3 months ago)
You are better than the text books i read. Keep it up.
Bernard Chu (4 months ago)
thank you very interesting sir
Blue Hippo (4 months ago)
Watch this video in 1.25 speed :/
OpenMinded30 (4 months ago)
The vids are very rich and nicely put. Plain simple and crystal clear. Many thx...
Ivan A Melnikov (4 months ago)
great video. thank you. are you doing more?
Deniz Denizer (4 months ago)
You're doing good, very good I think. Your video's are very informative. I'm learning very much things I never knew so well before. Your presentation and axplenation style are very understandible. It's fantastic that you make and publish these good video's. You are rendering a good international service by that. I hope you will continue producing and publishing this kind of video's. Thank you very very much.
Thank you! -Roman
Arti Chaure (4 months ago)
Do you have lectures for ISLM?
Arti Chaure (4 months ago)
Love these videos
krishna chaitanya (4 months ago)
There ain't any channel in the youtube that can explain the economics as interesting as you do.Thanks for all your quality videos.👍
Adnan Khan (5 months ago)
Excellent work done presentation and style of concept delivery is awesome
Jorge Calderon (5 months ago)
So your chart shows that people in Venezuela are as happy as people in Norway, Ireland and Costa Rica and happier than people in the US, Chile, Panama and Peru??? You've got to be kidding me.
Ahmed Seif (5 months ago)
Very useful
Pradeep Kumar (5 months ago)
Very good information!! Thank you!! Subscribed!!
Chris Boaden (5 months ago)
I have a question. If the poorest in a country with a growing GDP also benefit, does this mean trickle down economics does work?
Keith Rollins (5 months ago)
helpful, carry on
Bzucoslav (5 months ago)
3:00 cca - that is why you should use median not average
Your videos explain technical knowledge to dummies who don't know a damn about business like me. So I'd say you're doing well. 👍
TRXPLMRSBJ 19 (5 months ago)
YOUR VIDEOS SAVE MY LIFE. GHAD WHY DO WE NEED SCHOOL ANYWAYS? AHAHAH THANK YOU FOR MAKING THESE!
i love you very much (6 months ago)
These videos are awesome thank you very much for the good work guys
jeffrey honig (6 months ago)
A truly fair and realistic assessment of a nation's national per capita income would concentrate specifically upon the incomes of the most of its salaried workers in professions that require a bachelor's or higher degree, or a HS diploma and a hardcore skill, but do not require a professional license.  Everything else is just window-dressing.
Abhijeet Pal (6 months ago)
great job
ankit kumar (7 months ago)
today i watched your videos and now, I think I have no need to take classes in school. Thanks for making such videos.
Shah Rukh Qasim (7 months ago)
You didn't put correct GDP per capita for Pakistan. Its the PPP one. Real GDP per capita as of 2018 is around $1600.
Haidy Hemdan (7 months ago)
thanks for these useful videos
Elvis Hunter (7 months ago)
lessen population to improve GDP per capita, China had a strict one child policy for a long time and their GDP per capita grew, countries with a less population and more money to match the population which is high GDP per capita are the best places in the world which means wage are much higher and less competition for money. jobs, resources and space people have a easier life and quality lifestyle and the government also stays good with lesser people to support and maintain a good infrastructure, pension plans for citizen and cope with other government responsibility and these countries can also exploit other countries by running their companies companies, investments and extracting cheap labor in the form of outsourced work.......
sarthak z (7 months ago)
Why adjusted per capita income is not calculated. Gdp minus the top rich rich people gdp. Then the remaining gdp divided by population.
Sadham Hussain (8 months ago)
Great videos with simple explanation.
Pelagia Shorwa (8 months ago)
much obliged .....this is so helpful .......carry on
Nirman Kodithuwakku (8 months ago)
great work.. thanks.
Jakub Godlewski (8 months ago)
Nice video. i've got a question ( it was on my exam) . " explain why the sentence is wrong - " high level of real GDP per capita is always positive thing.". THanks for an answer. <:
Vvk M (9 months ago)
Wow sir...I was already hating economics my whole lyf...bt ur teachings made it a more loving subject
Great to hear! -Roman
Mr. Spook (9 months ago)
I just started learning macroeconomics out of interest and curiosity, and I'm already in love with your videos. Subscribed!
Welcome to the wonderful world of econ! Let us know how it goes! -Roman
MetraMan09 (9 months ago)
what about median gdp per capita rather than average?
Samrawit Tekeste Kahsay (9 months ago)
Thanks, 🙏🏾very interesting👌🏾
Ricardo Murillo (9 months ago)
NOPE. It is a mediocre indicator that must be replaced for the new generation. How about pollution and environmental stress? Great thinkers have said that those who believe on everlasting GDP growth for happiness are crazy. We are so obsessed with GDP growth that we are irreversably damaging the planet over it. Side note.. you must account for debt levels of a country when you look at gdp as well as distribution. You can grow at the expense of your kids. Barbaric.
Tarang Sharma (10 months ago)
I really lke your channel. it syncs with my level of understanding quite well.
V H (10 months ago)
Excellent presentations!
MITUL GOYANI (10 months ago)
Extremely well organized
Arnab Ghosh (10 months ago)
But real income of the people doesn't grow over growth of real GDP per capita always as the real income suggest the growth including the inflation and thus the percentage of poor and rich remains the same..
Truth Matters (10 months ago)
GDP is nothing to do with the income level. YOu are confused. GDP per capital is average production amount, not the average income.
Faiz Aiman (10 months ago)
Your guys are doing great!keep it up
Deepak Verma (10 months ago)
Its totally.. wrong Concept It's mean Japan is much more happy than tibitians It mean Japanese business are more happy than tibitian monk But.. Suicide and depression is more in Japan
wow (10 months ago)
very clearly explained! Thanks
aloke bachhar (10 months ago)
Thank you ,sir.I love all your videos.please carry on for us.Your university has taken a giant step to spread free education among all the people and you are doing a great job.So thank you once again.
Abhishek Ghegade (10 months ago)
Pakistani wealth is unevenly distributed after Nigeria. So true. It's a beggar country with such low per capita income and almost pathetic GDP. It begs hefty dollars from USA for development and then uses it for terrorism. Unemployment is highest in Pakistan. Pathans are forced to live in non urban, forest and barren area of Pakistan. Pakistan doesn't have access for clean drinking water and food. 1/3 rd of the Pakistan sleeps without eating food. Infrastructure is pathetic that you won't find sky scrapers, proper roads and even drainages. They don't work on their problems and often show fake stats to world. Even their science and history revolves around glorifying Islam. They get medical visa from India because there are no sufficient modern hospitals in Pakistan. Also, Pakistan doesn't even own water. Under Indus water treaty, India donates its water to Pakistan. Nearly, 40 million Pakistanis lack access to toilets. Farming is destroyed. Wealth is concentrated by corrupt politicians, terrorist organisation and military men with higher posts. This country even doesn't get proper electricity and imports it from India. They owe a heavy debt to USA and is now have become slave of communist China. Pakistan inflicts atrocities on Balochistan, Pakhtoons, sindhis. The dominant Punjabis Muslims are sharia oriented and have no human rights for Minorities in Pakistan.
Douglas W (10 months ago)
Great video
satyam tripathi tripathi (11 months ago)
Videos are good but if u upload videos on core topics like macro theory of distribution,classical Theory Of employment then it will further enhance its productivity.
Gerald Louis de kock (1 year ago)
Very interesting How ever in-spit of the very poor having an increase in income the failure to measure this against product inflation still leaves the very poor in the same predicament / Eg bread costs $ 1.00 now and in three months later it costs $ 1.50 but the value of the Dollar decreases and the price of goods go up I now by less than what I did meaning that A poor person is still poor even if they did get an increase on income say 2% the inflation rate out stripes the increase and this can be clairlly see in most third worlds
James Gadsden III (1 year ago)
Outstanding videos. Good explanation of GDP.
Affan Ahmad (1 year ago)
Excellent Videos Sir
Lucksika Choysong (1 year ago)
Great vdeos
aved aved (1 year ago)
What's to improve? This video is perfect.
Open learning (1 year ago)
if u interested in economics check this out guys https://skylimit2017.wordpress.com/2018/03/07/bop-current-account-and-capital-account-macroeconomics/
Ramprasad (1 year ago)
Superb sir.... Thanks for your info......
Amr Hassanien (1 year ago)
thank you very much really it is very helpful
naman rai (1 year ago)
brilliant video
Ovigwe Eguegu (1 year ago)
Great video
alok kumar (1 year ago)
Great
Srinivas Rathod (1 year ago)
nice video and great explanation
Justin Sandolph (1 year ago)
Amazing it's good how it is
Allen (1 year ago)
Very good video!! Thanks!
Anne Dalphin (1 year ago)
Thank you!
Ambreesh mishra (1 year ago)
Excellent sir
zoe fofo (1 year ago)
That was very helpful. So from what I can understand both real GDP and GDP per capita doesn't define the wealth of a country unless it is redistributed back to the people equally
Econ4 Every1 (1 year ago)
_Nominal_ per-capita improvements in income of the poor don't really tell us if the poor (the bottom 20%) are actually better off. Wouldn't we need to see _real_ per-capita income? In other words, just because income increases per-capita doesn't mean that the money they earn will buy the things they need. Perhaps using a measure like Purchasing Power Parity or something similar to it to really understand how much better the poor are doing as per-capita income rises? What if nominal per-capita income rises, but free time and disposable income decline? How might we measure for that? Cheers E4E1
Guilherme (1 year ago)
I'm sorry... I think I didn't explain well. GDP growth is calculated in real terms. When you are comparing countries or the same country on a time series you fix the currency in any given year.
Guilherme (1 year ago)
GDP and GDP per capita are already calculated in real terms.
Sandhya Basare (1 year ago)
Thanksss
Hussain Mani (1 year ago)
Hi professor these are the best videos, you are a True professor who teaches the hardest theories in simplest way.
pushparaj , (1 year ago)
Very interesting all of urs stuff and easy to understand
Anthony Wilson (1 year ago)
i disagree sir....rich countries dont have happier people
Ha Chun Keat (1 year ago)
Thank you for this video It is easy to learn about economics
Anirudh Koushik (1 year ago)
watching this a couple of years late from release but one of the best material for gdp!! I was struggling to find a decent web series about the same and accidentally stumbled upon this and boy was it worth it!! Thanks a lot for making this video series!!
Sergey Erlih (1 year ago)
some of the expressions in the videos are a little bit misleading because the inferences from the statistical data are overgeneralized. The things about HDI for example... What about overachievers and underachievers????
Angel Dela Cruz (1 year ago)
Sergey Erlih check Legatum Prosperity Index! :3
Saúl Mendoza (1 year ago)
Awesome! Super good explained
sanam gurung (1 year ago)
thanks for the best info
too simple get into more complex topics
Ashley Robinson (1 year ago)
i really love these videos , they have been very helpful
anand kumar (1 year ago)
Good video
Varandeep Panesar (1 year ago)
Felicitous : The word defines it all.

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