Living Conditions
Living conditions around the world vary from country to country.
Some countries have very large economies, but the majority of their citizens are poor.
Other countries have smaller economies, but the majority of their citizens are NOT poor.
So the size of a country's economy isn't the only factor that determines how wealthy its citizens are.
The size of its population is also an important factor.
Another factor is how a country's wealth is distributed between the rich and the poor.
Besides the size of economy what's another factor that determines living conditions? the distribution of wealth?
The size of a country’s economy isn’t the only factor that determines how wealthy?(the wealth of)?its citizens are.
A?country's living conditions depend not only on the size of its?economy. The size of its population is also an important factor. Another?factor is how a country's wealth is distributed between the rich and the poor.
Let's look at some examples.
This chart shows the world's 5 largest economies in 2015.
It ranks the countries by their Gross Domestic Product, or GDP.
The GDP is one way of measuring the size of an economy.
It is the total value of the goods and services produced in a country in a year.
As you can see, according to this chart, the US and China had the largest economies.
What does this chart use to compare the sizes of their economies? Gross Domestic Product
As we have seen, growing an economy isn’t enough.
In 2015, Germany had the fifth largest economy.
A country's living conditions depend not only on the size of its economy, but also on how its wealth is distributed.
The distribution of wealth is?also an?important factor that affects living conditions.
According to the chart, India had the third largest economy in the world.
Its economy was bigger than Japan's.
However, the average living conditions in Japan are much higher than in India.
One reason for this is the difference in population.
India has a much larger population, so its wealth is distributed among a much larger number of people.
You can find this information by checking a country's GDP per?capita.
Per capita means per person.
If two countries have the same GDP, but one country has half the number of people, its GDP per capita is twice as large.
What is one reason why the living conditions in Japan are higher than India? its population is much smaller
Another important factor is how the wealth of a country is shared.
In some countries much of the wealth is concentrated in just a few people.
For example, in the US, just 5% of the population holds more than 70% of the wealth!
This shows that many US citizens are not wealthy?despite the size of their economy.
In fact, the wealth share held by the wealthiest 10% was more than 10 times bigger than the rest of the population.
About what percent of the US population holds more than 70% of the country's wealth? about 5%
Why are the so many poor?people in the US despite the size of its economy? Much of the wealth is held by a small?segment of the population.
One reason is that Japan's population is much smaller than India's.
India has a much larger population, so its wealth is distributed among a much large?number of people.
As we have seen, much of the wealth of the US is concentrated in just a few people.
10% of its population had an estimated 75% of the wealth in 2015.
In this chart we see some comparisons with other countries.
In contrast to the US, 10% of Japan's population had less than half of the total wealth.
In China, in 2014, the estimated share of the top 10% was 64%, but this number is rising.
Russia had the highest concentration of wealth, at over 80%!
India, which has one of the largest economies, has the largest share of the world's poorest people.
The share of wealth of its richest 10% is 370 times that have its poorest 10%.
Which of these counties has the largest share of the world's poorest people? India
A major challenge for a government is to improve the living conditions of its citizens.
As we have seen, growing an economy isn't enough.
Population growth and distribution of wealth are also important factors.
Improving education and developing job skills can help people move up in an economy.
With better education and training, the poor can increase their ability to get better jobs and raise their income.
How can education change how wealth is contributed? It can help the poor get better jobs and increase their share of the wealth.
However, taxes are needed to pay for social services, including health and education.
Some countries tax the rich at a higher rate than the poor.
However, if taxes are too high, it can discourage investment and risk taking.
This is because investors won't take risks unless the rewards are high.
So, as you can see, these are complex issues.
How can high taxes discourage investment? They can reduce the rewards for taking a risk.
Investors won’t take risks unless the rewards are high.
