PERFORMANCE IN LIVING STANDARDS - AN INTERNATIONAL COMPARISON

Our ultimate objective is to enhance the standard of living of our societies. But the standard of living has different meanings for different people. A thorough investigation of the concept of the standard of living has been made only recently by Sen, who defines it in terms of functioning and capabilities. Functioning is an achievement, whereas capability is the ability to achieve. The main objective of the present paper is to compare achievements (levels) and improvement (changes) in the standard of living across countries. Using an axiomatic approach, an achievement index is derived which accommodates the view that a further increase in the standard of living of a country when it is already at a higher level signifies an achievement greater than that of another with an equal increase but from a lower base. The paper also tests for the statistical relationship between indicators of the countries' standards of living so derived in their per capita GDP. The question posed is whether the aggregate income which provides people with the means to achieve a better life, can be used as a proxy measure of the standard living and extent to which the country's improvement in the standard of living can be explained by the levels and changes in the per capita income. The analysis presented in the paper is based on the data from 80 developing countries.