Question

Why might per capita GDP be only an imperfect measure of a country’s standard of living?

Short answer

GDP per capita can be misleading in cases when a certain population is highly flourishing and hence pushing the indicator up but a certain section can also be extremely poor which is not reflected in the indicator. Other indicators like literacy, mortality rate, sex ratio, etc are not included too.

Step-by-step solution

Step1. Introduction

GDP per capita is the total GDP in an economy divided by the total population.

Step2. Explanation

GDP per capita can be a misleading indicator when understanding the standard of living in a country because it doesn't talk about how the GDP is distributed, i.e. it does not ensure equal distribution. It might be a case that a certain population is highly flourishing and hence pushing the indicator up but a certain section can also be extremely poor which is not reflected in the indicator. Other indicators like literacy, mortality rate, sex ratio, etc are not included too.