When people in the world’s 10 richest economies aren’t so well off, is GDP a meaningful measure?

Name: ‘Last-generation’ Singapore hawker fights to weather pandemic
Uploaded: 2020-11-13T17:30:10.000Z
Duration: 2 min 13 s
Description: ‘Last-generation’ Singapore hawker fights to weather pandemic

The latest World Bank research highlights the inadequacy of GDP to assess a country’s wealth, compared with the money in people’s pockets

Perhaps if environmental factors and the impact of inequality were included, then the top 10 list might look a little different

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People walk near the central business district of Singapore, one of the world’s richest countries as measured by per capita GDP. Photo: EPA-EFE

David Dodwell

Published: 1:30am, 14 Nov 2020Updated: 2:41am, 14 Nov 2020

Let me pose a trivia question for today: what are the world’s 10 richest economies, on a per capita basis? I imagine most of your guesses would include the United States, Germany and Japan, and on all three counts you would be wrong.

According to the World Bank’s just-published report by the International Comparison Programme (ICP), which every five years or so takes a microscope to 176 countries worldwide, the list is headed by Luxembourg, which in 2017 (the most recent comparison year) boasted GDP per capita of almost US$113,000. Qatar and Singapore follow, with just over US$90,000, then Ireland, Bermuda, the Caymans, Switzerland, the United Arab Emirates, Norway and Brunei.

Bundling them all together, the 10 richest economies in the world account for a total of just under 38 million people – barely half a per cent of the world’s 7.8 billion population.

The list also calls for extreme caution in trying to use gross domestic product to assess a country’s wealth, compared with the money that sits in people’s pockets. As Princeton economist Angus Deaton notes: “Whatever this list tells us, it is hardly an exact list of countries where people enjoy the world’s highest material living standards.”

Almost all are investment hubs or natural resource exporters in which only a tiny proportion of the population reap the kind of rewards that might justify high affluence ratings. Deaton reminds us that “at any given moment, GDP per capita includes amounts that are not part of people’s current well-being”. The average Irish citizen might say “Yea” to that.

02:13

‘Last-generation’ Singapore hawker fights to weather pandemic

But I am not here to beat up on statisticians and statistics, or to call for the abolition of GDP numbers – whatever their limitations as a guide to our economic progress or our success in eradicating poverty.