A better indicator of standards of living: The Gross National Disposable Income

Clara Capelli () and Gianni Vaggi
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Clara Capelli: Department of Economics and Management, University of Pavia

No 62, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: Measuring the standards of living is a fundamental concern in economics and particularly in the eld of development. Gross Domestic Product (GDP) is the most widely accepted measure for a country's economic size and performance, but in recent years the Gross National Income (GNI) has gained greater importance as a better measure for the monetary resources actually available to those who live in a country. However, this paper shows that - especially in developing countries - GNI is not the best indicator for people's living standards, as it does not record the so-called unilateral transfers (foreign aid and workers' remittances among others) and, therefore, the secondary distribution of income that takes place worldwide. In the last decades unilateral transfers - and most importantly workers' remittances - have been among the largest types of income ows entering developing countries thanks to the remarkable increase in the mobility of people. This has had a signi cant impact on these populations' purchasing power that cannot be neglected. Hence, the Gross National Disposable Income (GNDI), which includes both net factor income (captured by the GNI) and unilateral transfers, is to be considered a better tool to assess the resources at a population's disposal for consumption and saving. Yet, GNDI is rarely available in the major international reports and datasets and often confused in GNI in common practice. This paper tries to contribute to closing this void and includes a table in which GNDI is calculated for all countries listed in the World Bank dataset.

Keywords: National Income; Balance of Payments; Remittances (search for similar items in EconPapers)
JEL-codes: F60 O11 O15 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-12
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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