The Standard of Living Revolution: Rethinking the Future We Deserve

Living standards encompass more than just income – they reflect the conditions that allow people to lead healthy, fulfilling lives and participate in society. They include access to education and healthcare, economic opportunities, political freedoms, environmental quality and social support. To compare living standards across countries, researchers compile composite indices that draw on diverse data. While each index has limitations, together they paint a richer picture of how nations are doing and where they are falling short. This deep dive explores leading international measures of living standards and unpacks the social, political, scientific and environmental factors that shape human well‑being. 

Human Development Index – Achievements in Health, Education and Income 

The Human Development Index (HDI), introduced by the United Nations Development Programme in 1990, remains the most widely used measure of living standards. It combines three dimensions: life expectancy at birth (to reflect health), years of schooling (to reflect education), and gross national income per capita (to reflect material living standards) (Human Development Index (HDI) by Country 2025, n.d.). The HDI normalizes each dimension between 0 and 1 and takes their geometric mean; countries are then classified as having very high, high, medium or low human development. HDI explicitly broadens the lens beyond economic output to recognise that people’s capabilities matter. In 2025, about 62 countries achieved a “very high” HDI (≥ 0.800) while roughly a dozen remained in the “low” category (< 0.550)(Human Development Index (HDI) by Country 2025, n.d.)  

Top performers 

The 2025 rankings show that Northern European countries continue to dominate the HDI tables. Iceland, Switzerland, Norway, Denmark and Germany lead the world with scores around 0.97, reflecting universal healthcare, highly educated populations, and strong social safety nets. (Human Development Index (HDI) by Country 2025, n.d.-b) These nations have stable democracies, low corruption and gender equality. Life expectancy exceeds 82 years, and average school enrolment is over 13 years. High innovation and diversified economies (from hydroelectric power to advanced manufacturing) underpin robust incomes. The example of Norway demonstrates how revenue from natural resources, when managed through sovereign wealth funds and transparent governance, can finance public services and protect future generations. 

The bar chart above summarises the top five countries by HDI. The scores are clustered tightly around 0.97, highlighting how marginal improvements become challenging at high levels of human development. These countries invest heavily in early childhood education, vocational training and accessible universities. They also provide universal healthcare financed through taxation and regulated private providers. In addition to material affluence, social cohesion and trust contribute to well‑being. Nordic nations rank highly on measures of generosity, volunteerism and egalitarian policies, factors that correlate with positive life satisfaction in the World Happiness Report(Ventura, 2025b). The success of these small populations suggests that good governance, not just wealth, is critical. 

Human Development Index (HDI) by Country 2025 

Countries left behind 

At the other end of the scale, the HDI exposes severe deprivation and instability. Countries like Somalia, South Sudan, Central African Republic, Chad and Niger record scores below 0.42, reflecting chronic conflict, weak institutions, and lack of infrastructure(Ventura, 2025b). Life expectancy is often under 55 years due to preventable diseases and poor maternal care, while average years of schooling may be fewer than 3 years. Low agricultural productivity and climate shocks have contributed to famines and economic collapse. These states also struggle with political fragmentation and insecure property rights, deterring investment and perpetuating poverty. 

The second bar chart illustrates how the bottom five countries fall below even the global average of 0.72. The difference between the highest and lowest HDI scores underscores global inequality and the urgency of addressing underlying causes. Many low‑HDI countries are landlocked or desert nations that depend on agriculture and are highly vulnerable to climate change. Others have experienced protracted civil wars (South Sudan, Central African Republic) or terrorist activity. The HDI is criticised for not capturing inequality within countries or the specific vulnerabilities of minorities, yet its country‑level comparisons remain a powerful tool for advocacy and policy prioritisation. 

Social progress beyond GDP – The Social Progress Index 

Because economic measures alone cannot explain well‑being, the Social Progress Index (SPI) was developed by the non‑profit Social Progress Imperative to evaluate how effectively countries convert resources into improved lives. The SPI consists of 12 components across three dimensions: basic human needs (nutrition, medical care, water, sanitation, shelter, safety); foundations of well‑being (access to knowledge, information, health, environmental quality); and opportunity (personal rights, freedom, inclusion, access to advanced education). Unlike the HDI, it deliberately omits GDP to highlight outcomes over inputs. The index reveals that high GDP does not guarantee strong social outcomes: the United States has one of the world’s highest per‑capita incomes but lags behind many European countries on health, safety and personal freedom. Conversely, nations like Costa Rica and Uruguay deliver high social progress despite moderate incomes, reflecting investments in education, healthcare and renewable energy. 

Global progress on the SPI has stalled since the COVID‑19 pandemic. According to the 2023 report, over two‑thirds of people live in countries where social progress has stagnated or declined(Wikipedia contributors, 2025). The pandemic exposed weaknesses in health systems and exacerbated inequalities in education and digital access. Some advanced economies saw declines in personal rights and inclusion amid political polarisation. The SPI has also faced critique: it does not incorporate subjective well‑being or inequality measures, and some elements (like infrastructure) are excluded due to data limitations (Wikipedia contributors, 2025). Nevertheless, the SPI provides a nuanced picture of human outcomes and underscores that sustainable development depends on social infrastructure, not just economic growth. 

The Environmental Dimension – Environmental Performance Index 

Environmental quality is a critical determinant of living standards. The Environmental Performance Index (EPI), published by Yale and Columbia universities, ranks 180 countries on environmental health (air quality, sanitation, drinking water) and ecosystem vitality (biodiversity, climate policies, agricultural sustainability). The 2024 EPI reveals that Estonia, Luxembourg, Germany, Finland and the United Kingdom lead the world in environmental performance. These countries have invested in clean energy, effective waste management and biodiversity protection. Germany and Finland, for example, have ambitious emissions reductions targets and comprehensive renewable energy strategies; Estonia has made significant gains by phasing out oil shale and improving air quality. At the bottom of the ranking sit India, Myanmar, Laos, Pakistan and Vietnam. These countries face severe air and water pollution, rapid urbanisation, and environmental degradation linked to industrialisation and deforestation. 

The EPI chart ranks the top five countries according to an inverted score (lower ranks correspond to better performance). It highlights that even among developed countries there is variation in environmental stewardship. Estonia’s environmental turnaround demonstrates that policy choices can dramatically improve outcomes; the country set strict sulphur emissions standards and invested in wind and solar. Germany’s emphasis on energy efficiency and the UK’s legally binding carbon budgets also contribute to high performance. The bottom performers illustrate the link between poverty and environmental harm. In India and Pakistan, rapid industrialisation without adequate regulation has led to hazardous air quality and contaminated water, lowering life expectancy. Climate change is accelerating these challenges; scientists warn that the world has already crossed six of nine planetary boundaries, threatening the stability of natural systems. Improving living standards therefore requires integrating environmental policies with social and economic development. 

Poverty and multidimensional deprivation – Multidimensional Poverty Index 

Poverty is not solely about low income; it involves simultaneous deprivations in health, education and living standards. The Multidimensional Poverty Index (MPI) captures this by examining ten indicators grouped into three dimensions: health (nutrition, child mortality), education (schooling, years of schooling) and living standards (cooking fuel, sanitation, drinking water, electricity, housing and assets). A person is considered multidimensionally poor if they are deprived in at least one‑third of the weighted indicators. Unlike the HDI, the MPI is calculated at the household level, enabling analysis within countries.  

The 2024 MPI update delivers sobering statistics: 1.1 billion of the world’s 6.3 billion people live in acute multidimensional poverty, and more than half of the poor are children Approximately 40 % of the poor live in countries affected by violent conflict. The MPI also shows progress—76 of the 86 countries studied reduced poverty in recent years. 

MPI finding	Approximate value
People living in multidimensional poverty	1.1 billion
Poor people in conflictaffected countries	0.455 billion
Poor children (under 18)	0.584 billion
Countries that have reduced poverty	76

The chart illustrates key findings: the tall bar indicates the number of countries reducing poverty compared to the billions of people still deprived. Deprivations often overlap; for example, families without electricity also lack clean cooking fuel and sanitation. Multidimensional poverty is highest in Sub‑Saharan Africa and South Asia and is closely linked with rural residence. Tackling it requires cross‑sectoral policies: expanding social safety nets, investing in primary healthcare and sanitation, and delivering clean energy to off‑grid communities. 

The MPI underscores the human cost of conflict. Countries experiencing civil wars or widespread violence-such as Syria, Yemen and Afghanistan—see deprivation rates climb sharply. Displacement disrupts access to schools, health clinics and livelihoods. Gender inequality amplifies poverty: women and girls face barriers to education and health services. Climate shocks also exacerbate poverty through crop failures, droughts and natural disasters. Development strategies must therefore be conflict‑sensitive, gender‑responsive and climate‑resilient. 

Economic prosperity and inequality – poverty and prosperity in a global context 

Income poverty remains a pressing challenge. The World Bank’s 2024 Poverty and Prosperity Report notes that roughly 700 million people (8.5 % of the global population) live on less than \$2.15 per day, the international extreme‑poverty line. Progress on poverty reduction has stalled since 2019 due to the pandemic, inflation and climate shocks. Nearly 3.5 billion people—about 44 % of the world—live on less than \$6.85 per day, the threshold for moderate poverty. Sub‑Saharan Africa accounts for 16 % of the world’s population but 67 % of people in extreme poverty, partly because of high fertility and limited economic diversification. Without inclusive growth, it could take decades to eradicate extreme poverty. Global poverty is increasingly concentrated in fragile and conflict‑affected states, and climate change threatens to push an additional 132 million people into poverty by 2030. These statistics reveal that economic growth alone is insufficient; the quality and distribution of growth matter. 

Inequality also shapes living standards. The incomes of the richest 10 % globally are over 50 times higher than those of the poorest 10 %. Within countries, the gap between the top and bottom deciles has widened in many advanced economies since the 1980s. Inequality can constrain social mobility, weaken social cohesion and undermine democratic legitimacy. Progressive taxation, universal basic services and labour rights are policy tools to reduce inequality. The increasing automation and digitalisation of economies risk polarising labour markets further. Social policies must adapt to provide safety nets and reskilling opportunities. 

Prosperity and holistic well‑being – Legatum Prosperity Index 

The Legatum Prosperity Index offers a holistic approach to evaluating prosperity, combining both material wealth and social well‑being. It assesses 167 countries using 104 indicators grouped into nine sub‑indices: economic quality, business environment, governance, education, health, safety and security, personal freedom, social capital and natural environment. This breadth reflects the belief that prosperity requires an environment that fosters entrepreneurship, trust, freedom and environmental stewardship. In the 2023 ranking, Denmark topped the index, followed by Sweden, Norway and Finland, while South Sudan ranked last. The high‑ranking Nordic countries combine strong welfare states with competitive markets, low corruption and high civic participation. South Sudan, by contrast, faces armed conflict, weak institutions and humanitarian crises. 

The Legatum index highlights how governance and social capital influence economic outcomes. Countries with transparent institutions, rule of law and respect for civil liberties tend to attract investment, foster innovation and deliver better services. Social capital—the networks of trust and cooperation—underpins resilience and collective action. During the pandemic, nations with high social capital (e.g., New Zealand, Norway) coordinated responses effectively and achieved better health and economic outcomes. Natural environment is also integral: biodiversity conservation and ecosystem services support food security and livelihoods. The index’s broad scope makes it a valuable complement to the HDI and SPI, though it remains sensitive to the choice of indicators and cultural biases. Critics argue that weighting of subjective versus objective variables can influence rankings; nonetheless, the Legatum framework encourages policymakers to consider human flourishing in all its dimensions. 

Happiness and subjective well‑being – the World Happiness Report 

Subjective well‑being is an essential aspect of living standards. The World Happiness Report uses surveys of self‑reported life satisfaction from the Gallup World Poll and explains differences across countries based on six variables: GDP per capita, social support, healthy life expectancy, freedom to make life choices, generosity, and perceptions of corruptio In the 2025 report, Finland topped the happiness rankings for the sixth consecutive year, followed by Denmark, Switzerland, Iceland, Netherlands, Sweden, Israel, New Zealand, Austria and Australia. The Nordic countries’ repeated success underscores the role of trust, strong social safety nets, equitable societies and high-quality public services. Costa Rica and Mexico entered the top ten despite lower GDP per capita, illustrating that wealth is not the sole driver of happiness.The report found that acts of benevolence—helping strangers, donating money, volunteering—are strong predictors of happiness across cultures. 

The happiness index highlights that cultural and psychological factors matter. High income alone does not guarantee life satisfaction if social connections or personal freedoms are weak. Conversely, poor countries can achieve high happiness if community cohesion and purpose are strong. Policy implications include investing in mental health services, community spaces and civic participation. The pandemic demonstrated that supportive social networks and responsive governments buffered stress and improved resilience. Some critics caution that self‑reported happiness may be influenced by cultural norms and expectations, but over time the index provides valuable insights into human aspirations. 

Political and institutional context 

Governance and institutions play a pivotal role in determining living standards. Democracies with accountable governments and independent judiciaries tend to allocate resources more equitably and deliver public services effectively. Anti‑corruption measures and transparency enable citizens to hold officials accountable and encourage foreign investment. Countries like Denmark, Finland and New Zealand routinely top both corruption perception rankings and living‑standards indices. Political stability also fosters long‑term planning and infrastructure development. In contrast, authoritarian regimes or fragile states often prioritise elite interests, suppress dissent and neglect public goods. Weak rule of law and arbitrary property rights deter entrepreneurship and innovation. 

Conflict and insecurity undermine human development. Wars destroy infrastructure, disrupt education and health care, and force people to flee their homes. Women and children suffer disproportionately. Regions such as the Sahel, Yemen and Syria illustrate how violence erodes progress, leaving millions without basic services and livelihoods. Tackling conflict requires diplomatic efforts, peacekeeping, inclusive governance and development assistance that addresses root causes like exclusion and inequality. Post‑conflict reconstruction must focus on rebuilding institutions and social cohesion, not just physical infrastructure. 

Civil and political rights also influence well‑being. Freedom of expression, association and media enables social accountability and innovation. Countries that protect minority rights and encourage participation often report higher levels of trust and happiness. Conversely, repression and discrimination hamper human potential and can lead to social unrest. Ensuring that all groups-women, ethnic minorities, LGBTQ+ individuals-enjoy equal rights is essential for inclusive development. 

Science, technology and innovation - engines of progress 

Scientific advances and technological innovation shape living standards by expanding capabilities and creating new opportunities. Digital connectivity enables access to information, education and markets; smartphone penetration has transformed lives in countries like Kenya, where mobile money (M‑Pesa) empowers financial inclusion. Healthcare innovations—from vaccines to telemedicine-reduce mortality and morbidity. mRNA vaccines deployed during the COVID‑19 pandemic saved millions of lives and showcased global scientific collaboration. Renewable energy technologies (solar, wind, battery storage) are lowering emissions while providing affordable energy to remote areas. Agricultural innovations, such as drought‑resistant crops and precision farming, improve food security and resilience to climate change. 

Artificial intelligence and robotics offer productivity gains but also raise concerns about job displacement and ethical use. Policymakers must invest in education and lifelong learning so workers can adapt. Digital divides persist: billions remain without reliable internet access, limiting their participation in the digital economy. Closing these gaps is crucial for inclusive growth. Science also informs environmental management; satellite monitoring helps track deforestation and water use, enabling better policies. Public investment in research and development correlates with economic growth, yet many low‑income countries spend less than 0.5 % of GDP on R&D. International collaboration and technology transfer can help bridge this gap. 

Limitations, biases and the future of living standards measurement 

While composite indices illuminate trends, they inevitably reflect methodological choices and data constraints. HDI critics note that it uses national averages and ignores inequality; a country could have high HDI while leaving segments of the population behind. SPI omits subjective well‑being and infrastructure because of data gaps. Its reliance on available indicators means issues like mental health or informal work may be under‑represented. EPI has been criticised for emphasising policy outputs rather than actual outcomes and for biases that favour countries with better monitoring systems. MPI relies on household surveys that may be outdated and do not capture urban homelessness or informal settlements. Legatum’s Prosperity Index weights variables based on normative judgments; different weights would yield different rankings. 

Composite indices also risk oversimplification. People’s experiences are diverse and dynamic; a single score cannot capture the richness of human lives. Cultural context matters: what constitutes well‑being in Bhutan may differ from that in Germany. Moreover, indices lag behind current events—data are often two or more years old. Rapid crises like pandemics or conflicts may not be fully reflected until later editions. Nevertheless, these tools provide baselines for monitoring progress and holding leaders accountable. Future measurement efforts should integrate real‑time data, participatory metrics (where people define what matters) and intersectional analysis (to capture overlapping disadvantages). Big data and machine learning could complement traditional surveys but must be used ethically to protect privacy. Ultimately, the goal is not to rank countries but to improve lives. 

Toward inclusive, sustainable prosperity 

Understanding living standards requires a multidimensional lens that embraces health, education, income, environment, social rights and subjective well‑being. The indices explored here reveal both progress and deep inequalities. Northern European countries demonstrate that social democracies combining market efficiency with strong welfare states can achieve high human development, environmental stewardship and happiness. At the same time, hundreds of millions remain trapped in multidimensional poverty, and environmental degradation threatens global sustainability. Economic growth is essential but must be equitable and green; human rights and social cohesion are equally critical. Scientific innovation offers tools to overcome challenges but must be matched by inclusive policies. 

The future of living standards will be shaped by how humanity responds to intertwined crises: climate change, inequality, technological disruption and geopolitical tension. Achieving the United Nations Sustainable Development Goals by 2030 requires concerted action and solidarity. Governments, civil society, businesses and individuals all have roles to play—be it reducing emissions, fighting discrimination, investing in education and research, or supporting communities. By recognising the multiple dimensions of well‑being and addressing them holistically, we can build societies where everyone has the freedom and opportunity to thrive.