Income and consumption of Hungarian households in international comparison: catching up or falling behind?

The previous study in this volume provides a very thorough overview of the development of the Hungarian economy, analyzing trends by examining long time series. It reviews economic performance as measured by GDP from the perspective of convergence and catching up. My paper can be considered a kind of supplementary note, which further nuances the conclusions that can be drawn from GDP trends on a few points. GDP, or more precisely, per capita GDP, is often used to compare living standards internationally, and GDP growth rates have become synonymous with development. However, over the past decade, a significant body of literature has emerged that discusses the flaws and shortcomings of this abstract statistical construct (Stiglitz–Sen–Fitoussi 2009; Skidelsky–Skidelsky 2012; Coyle 2014). The most influential study by Stiglitz, Sen, and Fitoussi, for example, criticized several elements of the GDP concept, such as its insensitivity to income distribution effects (GDP can grow while the situation of the majority deteriorates) and the fact that environmental impact is not even part of the concept. I will mention two further critical elements that I will try to take into account in my analysis. First, GDP measures market production in a country, so the emphasis is on the supply side of the economy, while the well-being of the population is better characterized by income and consumption indicators.