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Unformatted text preview: one compares an advanced, rich country
with a less-developed one, there are striking differences in the quality of life, standards of
living, and health.
Figures 1.5 and 1.6 give a glimpse of these differences and depict the relationship between
income per capita in 2000 and consumption per capita and life expectancy at birth in the same
year. Consumption data also come from the Penn World tables, while data on life expectancy
at birth are available from the World Bank Development Indicators.
These ﬁgures document that income per capita differences are strongly associated with
differences in consumption and in health as measured by life expectancy. Recall also that
these numbers refer to PPP-adjusted quantities; thus differences in consumption do not (at
least in principle) reﬂect the differences in costs for the same bundle of consumption goods in
different countries. The PPP adjustment corrects for these differences and attempts to measure
the variation in real consumption. Thus the richest countrie...
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This document was uploaded on 02/24/2014 for the course KRANNERT 352 at Purdue University.
- Spring '14