Income per capita

All the selected countries have experienced a huge increase in living standards over the last century. Table 3.1 shows how, overall, real living standards in these developed economies rose by a factor of more than nine over almost 130 years. It is based on the heroic efforts of the veteran scholar Angus Maddison, who has devoted his career to estimating the world's economic growth over past centuries. No doubt many of his estimates and assumptions could be argued with, but they are the best available over such a long period.

Income per person or GDP per capita is the standard way of measuring the average material standard of living of a country's population, though of course it tells us nothing about how evenly or unevenly income is distributed. Comparisons of the living standards of different countries are sometimes made by simply converting each country's GDP per capita to a common currency such as US dollars. But this fails to allow for the fact that the amount of goods or services one US dollar buys differs greatly from one country to another. For this reason, international comparisons of living standards are more accurate when the common currency used has been adjusted to ensure it has similar purchasing power in each country. In Table 3.1 Maddison has achieved this by using ‘international dollars’. And because those dollars are all of the 1990 vintage, there is no need to allow for inflation when comparing amounts between years.