Using interior(a) income accounts to gauge a standard of liveness follows a quantitative workation of a population comparing it to other regions or other countries. This poses some(prenominal) issues when trying to gauge a standard of living found on the numbers alone. field of study income accounts may only study into consideration the amount of money earned per capita. However, it may not take into consideration leisure hours, disposable income, education, or flavour expectancy, which are all key factors in quality of life.
National accounts show standard of living per capita when compared to the population. The GDP divided by the population represents an average standard of living; however, does not conciliate the distribution of wealth among the population. For mannikin, exiguity can encompass 75% of the population that have very little income to provide for their families. sequence the upper 25% of the population makeups over 90% of the GDP. This example would show a comparable average when using national income accounts; however, the vast majority of the population could be under the poverty level. Using this example, a national account would not represent an accurate standard of living.
There is also some psyche in errors of measurement regarding GDP as countries that have a high probability in tax evasion callable to unfavorable tax code may be confront with problems of citizens underreporting their taxes. (Riley, 2006) Inflation can also be a find out factor in standard of living thus step-down the purchasing power of its citizens. (Riley, 2006) Finally, environmental considerations also need to be taken into consideration to determine the standard of living as air and water quality could lead to a inadequate quality of life, while still having purchasing power available. (Riley, 2006) exclusively these factors are key components in determining standard of living and are not quantitative measurements encompassed by the national income accounts.
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