Living standards describe the economic status of individuals within the jurisdiction of a government. As contrasted with human rights, which deal with equal, inalienable rights, living standards are concerned with alienable commodities (goods and services that are bought and sold) and the ability of individuals to purchase those commodities. The following criteria define living standards:
Level of individual disposable income in terms of the government’s currency
Purchasing power and stability of the government’s currency
Level of individual net worth
Cost of consumer goods and services
Living standards, like human rights, apply to the status of individuals, not governments. Specifically, living standards cannot be accurately calculated by dividing the gross domestic product (GDP) of a nation by its population count (GDP per capita). GDP per capita overstates living standards because GDP includes the operations of government institutions, which do not contribute to individual net worth, and omits the negative effect of taxes. For example, government-owned military installations, courthouses, museums, jails and libraries are needed to maintain human rights and provide high quality-of-life standards but they add nothing to individual net worth and, to the extent that the operation of these assets is supported by taxes, they decrease individual disposable income. While GDP per capita may be a convenient indicator of a nation’s economic activity, it is an unacceptable measure of living standards.