Using gross domestic product as the main indicator of well being

As a result, it could be confirmed that GDP is an indicator of well being at the most but not a measure to identify the quality of life or the welfare of the inhabitants of a country.

Why is gdp not a good measure of well being

This highlights that not only the amount of the GDP is required but also the way of how this value is calculated. Especially social factors are not recorded in this measure. Accordingly, it makes no sense to compare just the GDP figures of two countries it also has to be clarified whether these two nations work at a similar economic level. Well-being is economic and material and entirely dependent on economic growth. Thus, it is possible to make statements about its size. GDP represents the market value of all goods and services produced by the economy, including consumption, investment, government purchases, private inventories, and the foreign trade balance. Rather, it's a fragmented set of systems, some of which perform better than others. Different opinions exist. Specifically, I analyze the value costs and benefits o But, the Treasury Ministry is adding social dimensions to GDP to produce a comprehensive well-being budget for As a result, it could be confirmed that GDP is an indicator of well being at the most but not a measure to identify the quality of life or the welfare of the inhabitants of a country. Education, infrastructure, technology, mineral resources and political stability are only few treats Djellal and Gallouj, , p. Hence, the contribution of each single product to the GDP is measured by its market price.

We can also observe notions of equal opportunities, work and rewarding activities, natural resources and a protected living environment. This eliminates the problem of different numbers of workers at an economy and makes them more comparable.

Using gross domestic product as the main indicator of well being

GDP represents the market value of all goods and services produced by the economy, including consumption, investment, government purchases, private inventories, and the foreign trade balance.

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problems with gdp measurement

The twofold challenge is to show how SSE initiatives and networks create specific collective benefits for society, and how they contribute to an alternative representation of the economy.

Finally, a conclusion is given to identify the key findings of this essay.

Advantages of using gdp to measure living standards

Some analysts argue that it is a good instrument to gauge welfare because GDP per capita measures the income and expenditure of the average individual. These examples show that, on the one hand, many social facts are not included in the GDP calculation and, on the other hand, events that do not contribute to human welfare raise the GDP. Specifically, I analyze the value costs and benefits o By comparing GDP across countries some problems arise because it has to be adjusted at regional differences such as different currencies and different price levels. Nevertheless, GDP is also criticized because it does not consider facts such as income distribution and the impacts for the environment by the economic growth McDowell et. One opportunity is to compute the total amount of spending on domestically produced final goods and services Krugman, Wells and Graddy, , p. Twelve years ago, there were attempts by the Institute of Medicine to rigorously compile a report of the U. As a result, it highlights the tangibles of an average person and could therefore be seen as an indicator of the living conditions in a country Gans et. Accordingly, the purchasing power parities approach which considers such price levels should be used to prevent this mistake OECD, , p. Next, the paper deals with difficulties which could occur by comparing GDP of different countries. For instance, they have always different numbers of inhabitants, different economical and ecological requirements and mostly different currencies Fullbrook, , p. This eliminates the problem of different numbers of workers at an economy and makes them more comparable.

Follow me on Twitter. For this reason, it is acknowledged that GDP is not a good criterion of well being Wenzel,p. This goal depends on their capacity to bring about a change in representations of the economy and wealth, so that they are no longer dominated by the market and growth paradigm.

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How well GDP measures the well