How GDP is Misleading Measure of Wealth and Well-being!
GDP, which stands for Gross Domestic Product, is the most common abbreviation in economics. It has become widely used as a reference point for the health of national and global economies. No number is quite so central to public life as the gross domestic product. Political scientists build formulas around it to predict who will win the presidency. The stock market trembles at the approach of new quarterly figures. Other economic statistics, like budget deficits or health-care spending, are quoted as percentages of GDP. It has become the common measure of economic well-being. But GDP’s broad dominion has long had its critics. It was never meant to be the measure of our well-being, but only the measure of our production—literally, the total value of the goods and services produced within the national borders in a given year. While the quest for some broader measure of progress has been going on for a while it may finally be gaining traction at a time when people understand, as never before, how easily GDP and well-being can diverge. There are many flaws and ways in which GDP, Gross Domestic Product, can mislead us in estimating the size of an economy. It is also important to understand what GDP cannot tell us. GDP is not a measure of the overall standard of living or well-being of a country. Although changes in the output of goods and services per person (GDP per capita) are often used as a measure of whether the average citizen in a country is better or worse off, it does not capture things that may be deemed important to general well-being, such as the depletion of non-renewable natural resources. The first big way of misleading GDP is Environmental Degradation. Certain economic activities such as air pollution adversely affect the real economic value of environment. A part of growth of many countries comes with a destruction of value. This value is not deducted from that growth. For example, if you...
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