The Wiley Blackwell Encyclopedia of Consumption and Consumer Studies

Quality of Life, Measurements of

CLAIR BROWN

University of California, Berkeley, USA

DOI: 10.1002/9781118989463.wbeccs256

Defining and measuring the standard of living has a long history in economics and sociology, and is essential for understanding the role that consumption plays in how people live and their quality of life. The most commonly used national measure to compare the quality of life across countries and across time is gross domestic product (GDP) per capita or the closely related national income per capita. This approach has several weaknesses, and researchers have devised alternative measurements of the standard of living that are more comprehensive at both the national level and the individual level. There is no consensus on the best measure to use, and below is an overview of three alternative models and measures of quality of life: neoclassical, institutional, and Buddhist.

GDP AND NATIONAL INCOME: WHAT THEY MEASURE

GDP measures the market value of all final goods and services produced in a country in a given period, and national income, which is approximately 80 percent of GDP in the United States, measures the income earned through work and ownership of factors of production. Approximately 70 percent of US GDP is personal consumption. GDP per capita is used to indicate how well countries are doing economically, which is assumed to indicate the standard of living of the population. The weaknesses of the GDP as a measure of economic output and quality of life are ...