Things Not Included in GDP

Topics: Gross domestic product, Government, Goods Pages: 2 (392 words) Published: August 22, 2014
Things not included in GDP

There is a lot to consider when discussing things that are not included in Gross Domestic Product (GDP). “Even real GDP is an imperfect measure of current output and income. Some productive activities are omitted because their value is difficult to determine” (Gwartney et al., p. 143). We know that GDP is only measured in a restricted time frame. Imagine all the goods and services that are redistributed in a year’s time that are not included in GDP. Without all factors being counted the values are not precise in nature. In reference to our assigned text household production, the underground economy, leisure and human costs, quality variation and the introduction of new goods, and harmful side effects and economic “bads” are not included in GDP (Gwartney et al., p. 143-145).

In an article, titled, “The Gdp how the Gdp is Calculated and what it does not Count”; (Alpha 2007) mentions several specific factors that impact a faulty GDP. As we are aware a lot of the numbers that are documented are retrieved from companies through forms of surveys. “The governments can obviously use this to their advantage by selecting the companies that they know are steady companies and not choose the smaller companies who are more likely to be erratic.” (Alpha 2007) There is an extreme variance between high-end and smaller rural companies. An extreme difference will have a great impact when calculating GDP.

When one individual or company transfers payment in the form cash or check it is not included in GDP. When referencing the Education Portal website, (2003-2014) a prime example used is the transfer of welfare checks distributed by the government to an individual. A lot of people use government assistance therefore a lot of capital is not being factored into the GDP formula.

“If you lend money to one of my people among you who is needy, do...
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