Determinants of Global Living Standards: An Empirical Analysis of Inequality, Pollution, and Political Stability

This study investigates the influence of economic inequality, air pollution, and political stability on the global standard of living, operationalized through PPP GDP per capita. As global disparities intensify and environmental and political challenges persist, it becomes imperative to quantify the extent to which these multidimensional factors impact economic well-being. The contribution of this research lies in its integrative approach, combining institutional, environmental, and social determinants to explain national income variation. While GDP per capita is frequently used as a proxy for living standards (Husain, Qureshi, & Hussain 2019), existing literature inadequately captures how structural inequalities, environmental degradation, and governance jointly shape income performance. This study addresses this gap by presenting a unified empirical model supported by global data. Using data from the World Development Indicators (WDI) for the year 2019 across 57 countries, the research employs a cross-sectional Ordinary Least Squares (OLS) regression model. The independent variables include the Gini Index (economic inequality), PM2.5 concentration (air pollution), and the Worldwide Governance Indicator for political stability. GDP per capita (PPP) is the dependent variable. The model controls for multicollinearity and heteroskedasticity, ensuring statistical robustness. The regression model is statistically significant, with an adjusted R² of 0.676, indicating that 68% of the variation in living standards can be explained by the three variables. Political stability exhibited a strong positive correlation with GDP per capita, reinforcing the role of governance in promoting prosperity. Conversely, higher Gini coefficients and elevated PM2.5 levels were both significantly and negatively associated with living standards. These findings echo global statistics where countries like Norway and Finland, characterized by low inequality and clean air, report GDP per capita above $60,000, while nations burdened by inequality and pollution such as Nigeria and India remain below $8,000. The study recommends integrated policy frameworks that concurrently address governance, equity, and environmental health. Achieving progress across these domains is essential for elevating global living standards and realizing sustainable development goals.