Countries can be categorized as rich or poor based on various factors, but GDP per capita is a commonly used measure. However, this metric can be misleading as it doesn’t account for differences in prices between countries. For instance, the cost of a Big Mac can vary significantly across different regions even after conversion to dollars.
To obtain a more comprehensive analysis, The Economist uses three key measures: dollar income per person, income adjusted for local prices (PPP), and income per hour worked. These factors provide a more accurate representation of a country’s economic status by considering variables like price levels and productivity.
The rankings generated using these three metrics offer valuable insights into the financial well-being of nations worldwide. By going beyond simple GDP figures and taking into account additional factors, a clearer picture emerges of how countries compare in terms of economic prosperity.
