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This paper proposes the use of synthetic variable to examine differences in the standard of living in the EU countries. The synthetic variable allows to replace the whole set of variables into one aggregated variable. This variable is the basis for organizing and grouping countries in terms of standard of living. The subject of empirical analysis are 24 member states of the European Union in 1995-2010. The analysis of synthetic variable reveals that there are significant disparities between countries in the field of overall socio-economic development. The analysis show favorable situation in Ireland and very unfavorable conditions in Romania, Bulgaria and the Baltic countries.

The implementation of synthetic variable for constructing the sandard of living measure in European Union countries