Location: Macroeconomics Unit I - Measurement of Economic Performance

Discussion: Is GDP really a good measure of well-being?Reported This is a featured thread

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welkerjason
welkerjason
Is GDP really a good measure of well-being?
Jan 22 2008, 12:13 PM EST | Post edited: Jan 22 2008, 12:13 PM EST
My question for you guys is, what's so special about GDP? This monetary measure says nothing about so many indicators of humans' actual well-being, like education, health, distribution of income, the environment, crime rates, divorce rates, and so on. Why do economists use such a narrow figure to measure the well-being of entire nations, when the figure obviously lacks so much information about how happy people really are? 34  out of 46 found this valuable. Do you?    
Keyword tags: GDP happiness wealth
yunqimok
yunqimok
1. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 3:04 AM EST | Post edited: Jan 28 2008, 3:04 AM EST
While GDP says nothing about individual's well-being, education, health, etc, it still helps economists understand how a country's economy is doing. While GDP itself may not tell a great deal about the situation of the people, it does show how much a nation is producing. Also, by knowing the population of a nation, GDP per capita can also be determined. GDP may not be the perfect solution, but it is nonetheless a way to compare the economies of the nation.
GDP is also significant when it comes to knowing if a single nation's economy has grown or shrunk. By calculating nominal GDP, economists can predict the market trends in the coming years, foresee any recessions and perhaps even find ways to counter it. Thus, GDP is still a significant measure of economy. The happiness of people contributes little to a nation's output.
44  out of 56 found this valuable. Do you?    

HelenChu
2. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 4:58 AM EST | Post edited: Jan 28 2008, 4:58 AM EST
GDP is like a progress report for each country. Sure, we can compare GDPs across countries, but that won't tell us much because every country has a different set of circumstances. Even if we look at GDP per capita, it is still lacking what Purchasing Power Parity and Human Development Index are taking into consideration. But if we compare the GDPs from different years of the same country, that tells us more about the growth (or contraction) in the economy. It is still a very narrow economy-based comparison, but it gives us a pretty good idea of how the country has been or will be doing. 17  out of 25 found this valuable. Do you?    

kevinchiu
3. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 6:19 PM EST | Post edited: Jan 28 2008, 6:19 PM EST
Although GDP lacks the ability to indicate the well-being of people in a nation or distribution of income and such, GDP is able to represent the total aggregate output of a nation's economy annually; this helps to determines whether a nation's economy has experienced economic growth or recession through nominal GDP. In addition, GDP can also be used to provide GDP per capita, which provides some hint towards the well-being of individuals in a nation. 7  out of 16 found this valuable. Do you?    

nicolewong
4. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 7:51 PM EST | Post edited: Jan 28 2008, 7:51 PM EST
GDP itself is not a good measure of well-being because it does not take into account the standards of living for individual citizens. GDP per capita reflects how many goods and services the average person consumes and accomplishes the previous issue a little better. However, GDP still doesn't deal with issues such as ecological problems, suicide rates and so on. These factors should be included in the measure of well-being because materialistic things do not single-handedly comprise the well-being of an individual's life. 13  out of 19 found this valuable. Do you?    

agoldman
5. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 8:17 PM EST | Post edited: Jan 28 2008, 8:17 PM EST
GDP can measure the productiveness of an economy, however it is does not adequately reflect the well-being of a nation. For instance, by-products of production (pollution, toxic waste) are not deducted from GDP as costs to society, consequently allowing GDP to overstate the environmental well-being of a nation. There are other measurement indexes which more accurately reflect a societies well being such as:
1. Physical Quality of Life Index (PQLI), which attempts to measure infant mortality, life expectancy at age one, and basic literacy on a zero to 100 scale
2. Word Index of Social Progress (WISP) which gauges school enrolment, life expectancy, and external national debts.
Because GDP is a monetary measure, it doesn't account for many of the social issues that other indexes such as WISP and PQLI, and therefore is not a good measure of well-being.
16  out of 21 found this valuable. Do you?    

rksung
6. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 10:19 PM EST | Post edited: Jan 28 2008, 10:19 PM EST
GDP is not a good measure of well-being of people in a nation because it inevitablly includes all the by-products too like air, water, and sound pollution. GDP does not tell us what is the optimal combination of goods or services that would benefit society the most and it does not show us about the way output is distributed. Even though GDP lacks the ability to show the well-being of a country, GDP does acts as a way of comparison between years in one country to indicate whether there was any growth . 4  out of 10 found this valuable. Do you?    

richardtu
7. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 11:07 PM EST | Post edited: Jan 28 2008, 11:07 PM EST
GDP, this narrowed monetary measurement although doesn't help to measure a lot of things such as education, crime rates, the environment etc, it consistenly/annually helps countries analyze their total output. It gives the country an idea where their economic level is; are they doing bad or good? are they experincing recession or economic growth over a period of time? and this is quite essential for a country. Without GDP, they might just massively produce products that are useless and could not be sold, or not produce products that everyone prefer; allowing no economic growth. Also, measuring every individual's well-being or income level, or the whole environment, is way too time and effort consuming. You might be wasting scarce resources on things that might be pointless afterall. 5  out of 9 found this valuable. Do you?    

Chanmin
8. RE: Is GDP really a good measure of well-being?
Jan 28 2008, 11:35 PM EST | Post edited: Jan 28 2008, 11:35 PM EST
There are many things GDP does not measure, like humans' actual well-being, education, health etc. However this monetary measure provides the total market value of all final goods and services produced in a given year. This allows economists to compare the GDP in various years and determine the well-being of the entire nation. This comparison can allow economists to make conclusions about the growth or regression of the economy. Also, GDP per capita gives roughly a measurement of the wealth of individuals in the country. Therefore although it may lack a lot of information, it still provides a good measurement of the economy. 2  out of 8 found this valuable. Do you?    
KatherineYang
KatherineYang
9. RE: Is GDP really a good measure of well-being?
Jan 29 2008, 12:04 AM EST | Post edited: Jan 29 2008, 12:04 AM EST
As it is, GDP is not a good measure of well-being because it does not put value to the environment which is potentially harmful to all. Excluding the environment, however, GDP is still not perfect, but it is a good general measure of economic well being. From GDP one can still calculate GDP per capita, which helps to give an idea of individual well-being. In other words, GDP is good so long as nations remember it is only a GENERAL measurement of economic well being, it is not a complete measurement. 2  out of 4 found this valuable. Do you?    
anqxl
anqxl
10. RE: Is GDP really a good measure of well-being?
Jan 29 2008, 1:06 AM EST | Post edited: Jan 29 2008, 1:06 AM EST
As everyone above commented, GDP is not the most perfect way to measure a country's well-being. But we must consider that economists are only concerned about allocation of resources, so GDP, which looks at average income per head, national income or expenses, provide the information that economists need to analyze an economy. Although there's no indication for pollution or education, it is not the goal of GDP to provide such information. 4  out of 7 found this valuable. Do you?    

MichaelChow
11. RE: Is GDP really a good measure of well-being?
Jan 29 2008, 1:50 AM EST | Post edited: Jan 29 2008, 1:50 AM EST
Although GDP is not a great tool in credibility of the economy as mentioned above, it helps as a measure of the total market value of all final goods and services produced within a country in a single year. This lacks areas such as overall human and environmental well-being but it gives the sense of the relative size of different countries economies in contrast to one another. Also as the GDP increases/grows people on average will "have more stuff" therefore we can assume they will be better off. I totally agree with Katherine's quote of how GDP = General Measurement, but not complete. 1  out of 5 found this valuable. Do you?    
SharonLi
SharonLi
12. RE: Is GDP really a good measure of well-being?
Jan 29 2008, 3:57 AM EST | Post edited: Jan 29 2008, 3:57 AM EST
GDP does not measure people's well-being, but rather, like everyone has already said, the well-being of the economy. It tells us the value of what has been produced in the economy over the year, so we can tell how much 'stuff' the nation has. furthermore, GDP per capita can tell how much the average person consumes in the country. so GDP only tells us how well off people are in the sense of material well being. However, GDP does not tell us the quality of our environment, wealth, or average level of education. It can only really measure the well-being of a nation's economy. 1  out of 5 found this valuable. Do you?    

kxc.024
13. RE: Is GDP really a good measure of well-being?
Jan 30 2008, 1:08 AM EST | Post edited: Jan 30 2008, 1:08 AM EST
Although GDP does not provide much information about a person's well being, a country's health care and things like that, a high GDP indicates that in total, the nation is doing pretty well. From that, we can probably infer that the people in that country is doing fairly well, especially when compared to a country that has a lower GDP. However, the catch is that we don't know how many people are doing well. The high GDP may come from the high profits of a few extremely rich firms, while the rest of the citizens live in poverty. So I guess in the end, GDP per capita is still better than GDP. But when GDP per capita is unavailable, GDP can give us a pretty clear idea on how the country is doing as well. 2  out of 4 found this valuable. Do you?    

kxc.024
14. RE: Is GDP really a good measure of well-being?
Jan 30 2008, 1:12 AM EST | Post edited: Jan 30 2008, 1:12 AM EST
GDP can tell us how the country is doing in general, especially when GDP's are compared between countries. A higher GDP will probably infer that the country is doing better than a country with a lower GDP. However, the catch is that the high GDP may be from the extremely large profits of a few rich firms, while everyone else is living pretty badly. Therefore, it's still better to use GDP per capita as a form of comparison. 2  out of 4 found this valuable. Do you?    
TimChu
TimChu
15. RE: Is GDP really a good measure of well-being?
Jan 30 2008, 1:55 AM EST | Post edited: Jan 30 2008, 1:55 AM EST
while GDP tells nothing of a country's people's well being, it still tells a lot of the well being of the economy of the country. You might say that economists care less about the happiness of people than the strength of a nation's economy. Nowhere in an economist's graph is there mention of a citizen's happiness. Actually, thats not true, utility graphs are basically a consumer's happiness. but on a macroeconomic level, happiness is pushed out of the equation. I know. Its sad :( 3  out of 5 found this valuable. Do you?    
TimChu
TimChu
16. RE: Is GDP really a good measure of well-being?
Jan 30 2008, 2:22 AM EST | Post edited: Jan 30 2008, 2:22 AM EST
I think that GDP is used more to measure the economic well-being of a coutnry than the happiness of it's citizens. While in microeconomics, we often dealt with happiness and utility of consumers, macroeconomics focuses much more on the country as a whole and sadly enough, the happiness of it's citizens does not factor in it as much. Sad but true :( 1  out of 3 found this valuable. Do you?    

kevinhuang
17. RE: Is GDP really a good measure of well-being?
Feb 1 2008, 11:20 PM EST | Post edited: Feb 1 2008, 11:20 PM EST
GDP, although it doesn't measure the well-being of the residents does measure whether a country is growing or shrinking and allows for economists to predict the future of the economy and determine any upcoming trends that will have impact on the economy. The happniess of the people does not matter when thinking about this. 1  out of 3 found this valuable. Do you?    
JessicaNg
JessicaNg
18. RE: Is GDP really a good measure of well-being?
Feb 4 2008, 6:51 PM EST | Post edited: Feb 4 2008, 6:51 PM EST
GDP helps measure the economic well-being of a country, though as everyone as brought up, it does nothing in indicating the actual well-being of the people. It does not count in any nonmarket activities that brings in an increase of well-being, improvements in product quality, the environment, the distribution and composition of output. But GDP allows economists to measure any economic growth in countries, and be able to measure how "rich" the country is, for example in measuring expansion of military potential or political preeminence 3  out of 4 found this valuable. Do you?    

jeewono
19. RE: Is GDP really a good measure of well-being?
Feb 5 2008, 2:15 AM EST | Post edited: Feb 5 2008, 2:15 AM EST
It is true that the GDP does not indicate the individual's well-being like education and health, but economists like to use it because it can tell how the economy is doing in general. GDP is the total market value of all final goods and services produced in a year, therefore it can be a basic measure of an economy's economic performance. It also shows whether the economy is in expansion or recession. Although GDP lacks a lot of information, it allows us to see the growth of a nation's economy over time and how well or how poorly the economy is performing. 6  out of 8 found this valuable. Do you?    
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