Sorting countries into rich and poor categories can be a complex task. Traditional measures like GDP can be skewed by population size, as more people often result in higher output. However, looking at GDP per capita alone doesn’t account for differences in prices between countries. For example, the cost of a Big Mac may vary significantly across different regions, even after converting to dollars.
To provide a more comprehensive analysis, The Economist evaluates countries using three key measures: dollar income per person, income adjusted for local prices (PPP), and income per hour worked. By considering these factors, a more accurate representation of a country’s economic status can be obtained.
The rankings generated by The Economist using these three metrics offer a detailed insight into the financial well-being of nations around the world. By looking beyond simple GDP figures and taking into account variables like price levels and productivity, a clearer picture emerges of how countries compare in terms of economic prosperity.