Many people like to scold the GDP

Many people like to scold GDP, including per capita, as an indicator that misjudges our lives. To some extent, this criticism must be accepted. GDP is an indicator of economic activity and nothing more. GDP per capita already tells us something about wealth.

For example, GDP per capita is an excellent predictor of median income in a country.

I'll continue with the charts. In the following graph, you can see what proportion of the population in the country lives on less than $30 a day. These are international dollars that are used for comparison between countries.

The international dollar is calculated by dividing the currency unit of the respective country by the estimated purchasing power parity that the US dollar had inside the US at the specified time. That is, no matter where exactly a person lives, he will be able to access the same goods and services for $30 that are available for $30 in the United States.

The gap between high-income countries and the rest, as we can see, is very significant. In Russia in 2017, only 15% of the population spent $30 or more per day.

In the following picture, you can see the relationship between GDP per capita and the national poverty line. The comparison is also expressed in international dollars. It can be seen that in countries with high incomes, people can be considered poor who, for example, in Russia we do not consider poor (for example, they spend about $ 20 a day)

Grigory Bazhenov 2022-05-29