How is standard of living generally measured?

The standard of living is generally assessed through a multidimensional approach, primarily focusing on the economic well-being of individuals within a society. One of the most comprehensive indicators used is real income per person, which accounts for inflation to provide a clearer picture of purchasing power over time.

This measure goes beyond nominal income, as it adjusts for the cost of living and inflation, ensuring that changes in income reflect actual changes in the ability to purchase goods and services. Additionally, the consideration of the poverty rate adds crucial context, as it highlights the share of the population that is struggling economically, which can skew perceptions of overall wealth and prosperity in a society.

As such, when combining real income adjustments with poverty statistics, one can effectively gauge the economic conditions and quality of life for the average citizen, making this a robust method for measuring the standard of living.