Which metric in the HDI is adjusted for price level differences to compare living standards across countries?

• A. GNI per capita (PPP)
• B. Life expectancy index
• C. Education index
• D. Line of perfect equality

Answer: (A)

Comparing living standards across countries requires a price-adjusted measure of income because price levels differ around the world. In the HDI, the income component is GNI per capita expressed in purchasing power parity (PPP). PPP adjusts for these price level differences so that income comparisons reflect actual purchasing power, making cross-country living standard comparisons meaningful. The other two components—life expectancy and education—measure health and schooling outcomes, not price levels, so they aren’t adjusted for price differences. The line of perfect equality isn’t a metric used in the HDI.