5.

1- LIVING STANDARDS
Economic development refers to sustained growth in a nation's real GDP, accompanied by
improved living standards, reduced poverty, and enhanced human capital. It involves factors
like investment, productivity, and institutional reforms to achieve sustainable prosperity.

Development happens when people are better off, not only with higher incomes, but also
with access to benefits such as improved education and health

Econmist belive that economic development/ growth is a vital marco economic objective and
most practical measure of standard of ibing

Standard of living measures the social and economical well being within a society, measured
by factors such as income, consumption, housing, and access to goods and services.

poverty
Topic 5.2.1 definition of absolute and relative poverty 5.2.2 the causes of poverty 5.2.3
policies to alleviate poverty and redistribute income Guidance The difference between the
two terms. The causes of poverty including unemployment, low wages, illness and age.
Policies including those promoting economic growth, improved education, more generous
state benefits, progressive taxation, and national minimum wag

Poverty refers to a socio-economic condition where households lack the essential and
sufficient financial resources necessary to sustain a basic standard of living.

Absolute Poverty: Absolute poverty refers to a condition where individuals or households

lack the minimal essential resources necessary to meet basic physiological needs, such as
food, shelter, and clothing. It is quantified using an income threshold that reflects the cost of
a defined basket of goods and services required for subsistence. which is 1.25$ per day per
person by World Bank

Absolute poverty is more prevalent in developing countries than in developed ones

Causes of Poverty

vicious circle of poverty

 1. Population: The total number of individuals living in a specific geographic area or
within a defined group at a given time.
2. Population Growth: The change in the total population size over a specific period,
typically measured as a percentage increase or decrease. It accounts for births,
deaths, and migration.
3. Birth Rate: The number of live births in a population per unit of time, usually
expressed as births per 1,000 people in a year.
4. Death Rate: The number of deaths in a population per unit of time, typically
expressed as deaths per 1,000 people in a year.
5. Net Migration: The difference between the number of people moving into a region
(immigration) and the number of people leaving it (emigration) over a specific period.
It can be positive (net inflow) or negative (net outflow).
6. Immigration: The process of individuals moving into a specific geographic area or
country, typically with the intention of settling there.
7. Emigration: The process of individuals leaving a specific geographic area or country
to live elsewhere.

Certainly, here are seven well-developed reasons that explain why birth rates, death rates,
and net migration vary between countries, with economic terminology and analysis:

1. Economic Development and Fertility Rates: Countries at different stages of

economic development tend to have varying birth rates. In less developed countries,
children may be seen as an economic asset, contributing to family labor and support
in old age. This leads to higher fertility rates. In contrast, in more developed
economies, children are often perceived as an economic cost, leading to lower birth
rates. This phenomenon is known as the demographic transition, where birth rates
decline as economies advance.
2. Healthcare Infrastructure and Death Rates: The quality and accessibility of
healthcare services significantly impact death rates. Countries with well-developed
healthcare systems tend to have lower death rates because they can prevent and
treat diseases more effectively. In contrast, countries with limited access to
healthcare may experience higher mortality rates due to preventable diseases and
inadequate medical care.
3. Income Inequality and Migration: Income inequality can be a push factor for
emigration from countries with limited economic opportunities to those with higher
earning potential. People from countries with substantial income inequality may seek
better economic prospects abroad, resulting in net emigration. Conversely, countries
with lower income inequality may experience net immigration, as they can attract
talent and labor from elsewhere.
4. Government Policies and Family Planning: Government policies play a significant
role in shaping birth rates. Some countries implement pro-natalist policies to
encourage higher birth rates through incentives such as cash grants or parental
leave. Others may adopt anti-natalist policies to limit population growth through
measures like family planning education and access to contraception.
5. Urbanization and Migration: The process of urbanization, where people move from
rural to urban areas in search of better economic opportunities, can impact net
migration. Rapid urbanization can lead to net migration into cities as rural residents
 seek employment and improved living standards. This can result in higher birth rates
in urban areas and lower birth rates in rural areas.
6. Aging Population and Pension Systems: Countries with aging populations and
generous pension systems may have lower birth rates. In these countries, individuals
may have fewer children as they expect government pensions to provide financial
security in retirement. This demographic trend can put pressure on social welfare
systems and necessitate reforms.
7. War, Conflict, and Migration: Political instability and armed conflicts can force
people to migrate to safer regions. These migration patterns can lead to significant
demographic shifts, with countries experiencing both higher death rates due to
conflict and higher birth rates in refugee camps or host countries.
8. Cultural and Religious Factors: Cultural and religious beliefs can influence birth
rates. Countries with strong cultural or religious traditions that promote large families
may have higher birth rates. Conversely, secular societies or those with different
cultural norms may experience lower birth rates.

Natural change in population is calculated by deducting the death rate from the birth
rate

The following factors led to a decrease in the

death rate

● The agricultural revolution led to higher yields & healthier, more varied diets

● Improvements to medicine & medical care

● Improvements to technology & transport, leading to a wealthier population which

increases life expectancy

● Improved housing & sanitation

● The birth rate has remained high in LEDCs due to

1. Lack of access to family planning & contraception

2. An increase in women surviving childbirth
3. Families continuing to have large numbers of children to look after their
parents in old age & to help support the family
4. Culture of having larger families which takes many years to change
5. Religious reasons
● The birth rate has fallen significantly in many MEDCs due to

1. Increased access to family planning & contraception

2. Changing social norms which include starting families later, having fewer
children, or remaining single
 3. Birth Rates: Birth rates vary between countries primarily due to differences in
their economic development and demographic transition stages. In
economically developed countries, birth rates tend to be lower because of
higher levels of education, increased access to family planning services, and
greater career opportunities for women. These factors lead to a higher
opportunity cost of childbearing and, consequently, lower fertility rates. In
contrast, less developed economies often experience higher birth rates due to
limited access to education, lower female labor force participation, and a lack
of effective family planning programs. Economically, lower birth rates in
developed countries can result in a demographic dividend, freeing up
resources for investments in education, healthcare, and infrastructure.
● 1. Economic Development: Birth rates tend to vary significantly between countries
due to differences in economic development. In less economically developed
countries, birth rates are often higher. This is because children are seen as a source
of labor in agriculture and other industries, and families may have more children to
support them in their old age. Additionally, in economically disadvantaged regions,
access to family planning services and education on contraception may be limited,
contributing to higher birth rates. Conversely, in more economically developed
countries, there is usually better access to healthcare, education, and economic
opportunities. This leads to lower birth rates as people prioritize careers, and the cost
of raising children increases, reducing the economic incentive to have larger families.

2. Education and Gender Equality: Another key factor influencing birth rates is the
level of education and gender equality in a country. When women have equal access
to education and employment opportunities, they tend to delay childbirth and have
fewer children. This is because educated women are more likely to pursue careers
and have a better understanding of family planning, leading to a decrease in the
fertility rate. Gender equality also impacts birth rates as it often empowers women to
make decisions about family size and spacing between children, contributing to a
decline in birth rates in more gender-equal societies.

3. Government Policies and Incentives: Government policies can also play a

crucial role in shaping birth rates. Some countries implement pro-natalist policies,
offering financial incentives or benefits to encourage families to have more children.
These incentives can include tax breaks, cash payments, or subsidized childcare.
Conversely, other countries may have anti-natalist policies, such as China's former
one-child policy, which restricted the number of children families could have.
Economic analysis is essential here to assess the effectiveness and efficiency of
these policies in achieving desired population goals and their impact on economic
growth and sustainability.

4. Urbanization and Cost of Living: The degree of urbanization and the cost of
living in a country can impact birth rates. As more people move to cities for job
opportunities, the cost of living tends to rise, making it more expensive to raise
children. Additionally, urban living often offers greater access to family planning
services and education, which can lead to lower birth rates. Economic analysis can
examine the correlation between urbanization rates, cost of living indices, and their
effects on birth rates, shedding light on the economic drivers behind these trends.
 5. Social Norms and Cultural Factors: Social norms and cultural beliefs also
influence birth rates. In some countries, there may be strong cultural or religious
traditions that encourage larger families. Economic analysis can explore the
economic consequences of these cultural norms, such as their impact on labor force
participation, education, and healthcare expenditures, to understand why birth rates
vary in these contexts. Additionally, globalization and exposure to different cultural
norms through media and migration can lead to shifts in attitudes towards family size
and impact birth rates.

1. Death Rates: Death rates also vary between countries due to economic
factors and healthcare systems. Developed countries typically have lower
death rates because they can afford advanced healthcare infrastructure,
better nutrition, and access to quality medical services. These countries
invest heavily in healthcare, resulting in longer life expectancies and lower
mortality rates. In contrast, less developed nations may have higher death
rates due to inadequate healthcare infrastructure, poor nutrition, and limited
access to medical services. This can have economic implications as high
death rates can reduce the labor force and hinder economic growth.
● . Demographic Factors and Aging Population: Demographic factors, such as the
age structure of a population, also impact death rates. Economically developed
countries often have aging populations, which can lead to higher death rates due to
age-related illnesses and healthcare costs. Conversely, less developed countries
may have younger populations, which may experience lower death rates but could
face challenges in providing education and healthcare to a growing youth population.

Healthcare Infrastructure and Access: One of the primary reasons for variations
in death rates between countries is the state of their healthcare infrastructure and
access to medical services. Economically developed countries often invest more in
healthcare, leading to better healthcare facilities, advanced medical technology, and
a higher density of healthcare professionals. This results in quicker diagnosis, better
treatment, and lower mortality rates. In contrast, economically disadvantaged
countries may lack resources for adequate healthcare, leading to higher death rates
due to preventable and treatable disease

Government Healthcare Expenditure: The level of government expenditure on

healthcare, as a percentage of GDP, can explain variations in death rates. Countries
that allocate a higher percentage of their GDP to healthcare tend to have better
healthcare systems, including more hospitals, better-trained medical professionals,
and access to essential medications.

Global Economic Interactions and Disease Spread: In an interconnected world,

economic factors can influence the spread of diseases, which in turn impacts death
rates. Global trade and travel can facilitate the rapid spread of infectious diseases.
Countries with extensive international economic ties are more vulnerable to
epidemics and pandemics. Economic decisions, such as international travel
restrictions and trade policies, can affect the rate at which diseases spread across
borders, ultimately impacting mortality rates both within and between countries. This
 highlights the need for coordinated economic responses during global health crises
to mitigate the spread of diseases and reduce death rates.

1. Net Migration: Net migration rates vary widely between countries, driven by
economic factors and quality of life. Countries with strong economies, job
opportunities, and better living conditions tend to attract more immigrants. For
example, developed nations often experience positive net migration as
individuals seek better economic prospects and improved standards of living.
In contrast, countries facing economic challenges or political instability may
witness net emigration as people leave in search of economic stability and
safety. The net migration rate can significantly impact a country's workforce,
tax base, and economic growth.
2. Linkages Between Birth and Death Rates: There is often an inverse
relationship between birth and death rates. As a country's economy develops,
its birth rates tend to decrease while death rates decline simultaneously. This
phenomenon is a key driver of demographic transition. Initially, high birth and
death rates characterize less developed economies. As these nations
progress economically, better healthcare and living standards lead to a
decline in death rates. However, birth rates may not immediately follow suit,
resulting in a temporary increase in population growth, known as the
demographic dividend. Understanding these dynamics is crucial for economic
planning, as a sudden population increase can strain resources.
3. Economic Implications: Birth rates, death rates, and net migration have
profound economic implications. Low birth rates in developed countries can
lead to aging populations, potentially straining social welfare systems and
reducing the available workforce. On the other hand, high birth rates in less
developed nations can provide a youthful workforce, which, if effectively
harnessed, can be a demographic dividend, boosting economic growth. Net
migration can also impact a country's economy by contributing to workforce
diversity and filling labor shortages, but it must be managed effectively to
ensure social and economic integration. Understanding these demographic
factors is essential for economic policymakers to make informed decisions
regarding labor markets, healthcare, education, and social welfare programs.
●
demographics - the study of population distribution and trends. Such Demographics
include differences in the composition of gender, age distribution and the
dependency ratio

Gender This refers to the number of males compared with the number of females in
the population.

Age distribution This refers to the number of people within different age groups in the
population

A population pyramid is a graphical representation of a country's population

distribution by age and gender.

The dependency ratio is a comparison of the number of people who are not in the
 labour force with the number of people in active paid employment

Dependency ratio = dependent population + working population

high birth rates, mainly in less economically developed countries • a higher

compulsory school leaving age, thus keeping school students as part of the
dependent population for longer • Social changes such as workers entering the
labour force at a later stage due to the demand for higher education, or more people
choosing early retirement (thus reducing the size of the \\urking population).

Overpopulation occurs when country has a population that exceeds its available
resources and infrastructure's capacity to sustain a decent standard of living for its
population

Malthusian growth theory suggested that uncontrolled population growth

would put pressures on the resources ofrhe country, thus negatively impacting
living standards.

If the theory materialised, this would mean that population growth would eventually
exceed food output for the population. This has not happened in reality for two main
reasons: • There have been slower population growth rates than expected, especially
in more economically developed countries, due to social changes such as the high
opportunity costs of raising children . • There has been a geometric progression in
food production due to advances in food technology, such as improved farm
machinery, irrigation systems, genetics, pesticides and fertilisers.

1. Higher crime rates

2. Higher unemployment or underemployment
3. Higher levels of food & water shortages
4. Higher pressure on services such as hospitals & schools
● The country is over·populated if the population is roo large, given the available
resources of the country. Fertility rates above the replacement level can lead to
potential over·population, with negath-e economic consequences such as famine,
housing shortages, energy shortages and diseases. This causes a fall in GDP per
capita as there are insufficient resources to sustain the population. In this case, to
reach the optimum population, the government could either introduce measures to
reduce the population size or introduce measures to boost inwsm1ent and
productivity in the economy.

Certainly, here are four economic effects of increases in population size, along
with detailed explanations using economic terms:

1. Increased Labor Force:

■ Positive Effect: A larger population means a larger labor force, which
can potentially boost economic growth. This phenomenon is known as
the "demographic dividend." As the working-age population expands,
there is greater potential for increased production and output.
 Businesses can tap into a larger pool of labor, potentially leading to
higher productivity and economic efficiency.
■ Negative Effect: However, a sudden surge in the labor force without
corresponding job opportunities can result in high unemployment
rates. This surplus labor can depress wages, reducing overall income
levels and leading to income inequality. It also places pressure on
social safety nets and government resources to provide support for
the unemployed.
2. Consumer Demand:
■ Positive Effect: An increase in population size can create a larger
domestic market for goods and services. This is particularly
advantageous for businesses because they can expand their
customer base, leading to increased sales and profits. It can also
attract foreign investment and trade, further stimulating economic
activity.
■ Negative Effect: If population growth outpaces economic
development, it can lead to a situation where the population's
purchasing power does not align with the increased consumer
demand. This can result in inflation as demand outstrips supply,
potentially eroding the purchasing power of consumers.
● T he economy - Continual population growth puts more pressure on an economy's
scarce resources. This can lead to inflationary pressures or an increase in the
demand for imports if the country cannot produce enough to meet the needs and
wants of the population. For example, land in prime locations is scarce , so a larger
population in these areas is likely to force land prices to soar. Inflation can create
problems for the economy (see Chapter 18) and cause economic growth to slow

The n atural environment - An increase in the size o fa population also puts strain on
the environment. Non-renewable resources are depleted in the production process
and the increased level ofproduvtion also puts strain on the natural environment. For
example, pollution and traffic congestion are by-products of overpopulated regions of
the world

Underpopulation, on the other hand, occurs when a region or country has a

population that is too small to fully utilize its available resources and infrastructure or
when the population is declining.

1. Fewer people paying tax which can lead to higher taxes

2. Underused resources, which can lead to wastage
3. A shortage of workers
4. Lower levels of exports & production which affects the wealth of an area
5. Fewer customers for goods & services
● Decrease in Population

country is ·populated ifit does not ha~·e sufficient labour to make the best use of its
resources. In this situation, GDP per head of the population could be funher
increased if there were more human resources. Fertility rates below the replacement
le\·el can lead to under·population, causing the potential economic decline. In this
case, to reach the optimum population, the government could introduce measures to
increase the population size, such as encouraging immigration.

1. Labor Shortages:

■Positive Effect: A decrease in population size can lead to labor

shortages, which can positively impact workers. With fewer job
seekers available, employers may need to offer higher wages and
better working conditions to attract and retain talent. This can result in
improved income and job security for workers, ultimately raising their
standard of living.
■ Negative Effect: On the flip side, labor shortages can also hinder
economic growth. Businesses may struggle to find qualified workers to
meet their production needs, leading to unmet demand, decreased
productivity, and potentially lower overall economic output.
2. Aging Population:

■Positive Effect: An economic benefit of a declining population is an

aging workforce. Older workers tend to be more experienced and may
possess valuable skills, contributing to higher productivity. This can
lead to increased efficiency and, in some cases, higher-quality work.
■ Negative Effect: However, an aging population can also pose
economic challenges, primarily related to increased healthcare and
pension costs. As the proportion of elderly individuals grows,
government budgets may face strains due to the need for more
extensive healthcare services and pension support. This can lead to
higher taxes or reduced public investments in other sectors like
infrastructure and education
3. Governments may

change the migration laws

to encourage immigration so that labour shortages are prevented

■ Excessive immigration can change the nature & culture of different

regions within a country
4.
The changing size and structure of the population also has effects on an
economy. It has an impact on the following

Ageing Populations

■ Many developed economies are experiencing ageing populations &

an increase in the older dependent population
■ The implications of this include
1. Increased pension payments by governments
2. Increased need for care homes (public & private)
 3. Increased pressure on the healthcare services & social care
results in higher government spending
4. It also results in a smaller labour force & often Governments
collect less tax
5. Firms suffer worker shortages
6. Labour shortages result in increased wage costs for firms
5. .As a result, many go.·ernments have introduced compulsory pension savings
schemes and have raised official retirement ages.

Youthful Population: A higher proportion of young people can boost

economic productivity if they are well-educated and gainfully employed. This
so-called "youth bulge" can lead to a demographic dividend, potentially
driving economic growth.

■ Youthful Population: A youthful population may have different

consumption patterns, with increased demand for consumer goods,
education, and technology.
■ Aging Population: An older population may shift its consumption
patterns toward healthcare, leisure, and retirement-related products
and services.
6. Migration

■ In some countries migration can lead to an imbalance in the

population structure e.g. the UAE has significantly more males than
females

■ Rapid population growth caused by migration can lead to

1. Increased pressure on services such as healthcare &

schools resulting in increased costs for government
2. A shortage of housing which generates social issues in
society
3. Increased traffic congestion which is a negative externality
4. Increased water & air pollution which are negative
externalities
5. Food shortages
■
ffects of Changes in Gender Distribution:

1. Labor Force Participation:

■ Gender Balance: A more balanced gender distribution

in the labor force can potentially enhance economic
productivity. It allows for a broader and more diverse
talent pool, which can lead to increased innovation and
competitiveness.
 ■ Gender Imbalance: Gender imbalances in the
workforce can lead to disparities in job opportunities,
wage gaps, and reduced overall economic potential.
Gender discrimination can hinder economic growth and
development.
2.
Optimum population occurs when there is a balance
between the number of people & the resources/technology
available

■ The optimum population results in the highest

standard of living
■ There are not so many people or so few
resources that the standard of living falls

■ There are enough people to develop the

resources of the country

■ The **characteristics of a population (**the

distribution of age, sex, ethnicity, religion etc), is
known as the population structure

■ The population structure is the result of

changes in:

■ the birth rate

■ the death rate
■ net migration
■ The two main characteristics of age & sex can
be shown on a population pyramid

The Distinction Between Real, Nominal & Per Capita GDP

● In economics, the use of the word nominal refers to the fact that the metric has not
been adjusted for inflation

● Nominal GDP is the actual value of all goods/services produced in an economy in a

one-year period

1. There has been no adjustment to the amount based on the increase in

general price levels (inflation)
● Real GDP is the value of all goods/services produced in an economy in a
one-year period - & adjusted for inflation

1. For example, if nominal GDP is $100bn and inflation is 10% then real GDP
is $90bn
● Real GDP per capita = rGDP / the population

1. It shows the mean wealth of each citizen in a country

2. This makes it easier to compare standards of living between countries:
■ For example, Switzerland has a much higher GDP/capita than Burundi
● It is useful to know the rGDP/capita, however it has the following disadvantages

1. It is a single indicator so provides very limited information

2. It is an average so there may be significant poverty in many parts of a
country that has a high rGDP/capita
● When an exam question uses the phrase 'at constant prices' it is referring to real
GDP. For example, a question may read, 'Explain what is meant by a rise in GDP at
constant prices'. This requires you to define real GDP and then explain the rise.

Real GDP per capita is a measure of a country's economic performance. It

calculates the economic output (Gross Domestic Product or GDP) divided by the
population, adjusted for inflation (hence "real" GDP) to provide a more accurate
reflection of each individual's economic well-being.

Components:

1. Gross Domestic Product (GDP): This measures the total value of all goods
and services produced within a country's borders in a given period.
2. Population: The total number of people living in the country.
● Certainly, let's explore the advantages and disadvantages of using Real GDP per
capita as an economic indicator:

Advantages:

1. Economic Performance Assessment:

■ Advantage: Real GDP per capita provides a straightforward measure
of a country's economic performance. It quantifies the average
economic output per person, allowing for comparisons between
countries and over time.
■ Explanation: This indicator offers a quick snapshot of a nation's overall
economic health and helps policymakers, investors, and analysts
assess economic trends.
2. Historical Comparison:
■ Advantage: Real GDP per capita enables historical comparisons,
making it useful for tracking changes in a country's standard of living
over time.
 ■Explanation: It provides a historical context for evaluating economic
growth, recessions, and periods of prosperity, helping economists and
policymakers understand economic cycles.
3. Policy Evaluation:
■ Advantage: Governments and policymakers use real GDP per capita
to evaluate the effectiveness of economic policies.
■ Explanation: By monitoring changes in real GDP per capita,
policymakers can gauge the impact of policy decisions on economic
growth and well-being, allowing for adjustments as needed.
4. International Comparisons:
■ Advantage: Real GDP per capita facilitates international comparisons
of living standards and economic development.
■ Explanation: It helps in identifying disparities between countries and
regions, making it a valuable tool for assessing global economic
inequality and opportunities for development.
● Disadvantages:

1. Quality of Life Ignored:

■ Disadvantage: Real GDP per capita does not directly measure the
quality of life or well-being of individuals.
■ Explanation: It focuses solely on economic output and does not
account for factors such as income inequality, access to healthcare,
education, or environmental sustainability, which are crucial
components of well-being.
2. Distribution of Wealth and Income:
■ Disadvantage: Real GDP per capita does not consider how wealth
and income are distributed among the population.
■ Explanation: A high real GDP per capita may coexist with significant
income inequality, leading to disparities in living standards and
potential social unrest.
3. Non-Market Activities Excluded:
■ Disadvantage: Real GDP per capita excludes non-market activities,
such as unpaid household work and volunteerism.
■ Explanation: This omission may underestimate the overall
contributions to society and well-being, particularly for activities critical
to daily life and community development.
4. Environmental Impact Overlooked:
■ Disadvantage: Real GDP per capita does not account for the
environmental impact of economic growth.
■ Explanation: It can incentivize environmentally harmful practices and
resource depletion, as long as these activities contribute to GDP,
without considering long-term sustainability.
● In summary, while real GDP per capita is a valuable economic indicator for assessing
a country's economic performance and standard of living, it has limitations. Its narrow
focus on economic output and neglect of important factors like income distribution,
non-market activities, and environmental sustainability necessitates the use of
additional indicators and metrics to provide a more comprehensive understanding of
overall well-being and economic health.
 Human Development lndex (HDI) produced by the United Nations Development
Programme (UNDP).

Gross National Income (GNI) per capita, adjusted for purchasing power parity (PPP),
is used as a proxy for the standard of living

1. Health, as measured by the life expectancy at birth e.g.in 2019 it was 81.2
years in the UK

2. Education, as measured by a combination of the mean years of schooling

that 25 year olds have received, together with the expected years of
schooling for a pre-school child

3. It is a composite indicator & includes several important indicators of living

standards

4. It includes rGDP/capita which is an average - so the HDI still does not take
into account inequality in the distribution of income

5. It does not measure environmental damage or resource depletion

6. It does not take into account cultural differences or measure qualitative

factors such as happiness or equal rights

● Both MCQ & structured questions often ask you to compare or analyse the HDI &
GDP/capita of a country. On the whole, there is usually a positive relationship.
Countries with a higher HDI value usually have a higher GDP/Capita. However, look
for exceptions in the data presented - is the GDP/capita rising while the HDI is
falling? If so, one reason may be that the inequality in the country is worsening (rich
getting richer & the poor, relatively poorer).

There are three main criticisms of using the H DI to classify countries. First, the
components ofrhc H D I (life expectancy, education and income) are weighted
equally, although they do not necessarily contribute to human development in an
equal way. Second, the three components arc too narrow as an indicator of living
standards. For example , the H DI ignores political and economic freedom, which
many consider crucial to the standards of living in a country. A third criticism is rhar
the H D I docs not take imo account inequalities in income and wealth within and
between coumries, so comparisons of living standards become Jess meaningful