Why GDP per capita is or is not a good measure of living standards
Aayat Hafezjee I s GDP per capita a misleading guide ? Economists and politicians often treat GDP per capita as a national wellbeing thermometer. On the surface, this makes sense: divide a country’s total output by its population to get an average income. But this figure can be dangerously misleading... What is GDP per Capita and Why Do We Use It? The GDP per capita formula is: We use it to compare countries’ income levels, track national growth over time, and categorise countries by income (e.g., low- vs middle-income). For example, Nigeria’s nominal GDP in 2023 was about $364 billion. With a population of over 220 million, its GDP per capita was roughly $1,596.6 (World Bank, 2024), placing it in the lower-middle-income bracket. But does this mean most Nigerians live comfortably? As we will see, the answer is no. Why GDP per Capita is Not Enough ? Income Inequality GDP per capita is an ave...