4. Although GDP per capita is the most commonly used measure of a country’s succ

Question

4. Although GDP per capita is the most commonly used measure of a country’s success, many economists believe it does not give an accurate measure of a nation’s economic well-being. Some studies have concluded that that GDP is not the best measure of well-being, and although it may be the best available on a timely basis, other factors need to be considered in addition to GDP to give a more accurate picture of economic well-being and the disparity of well-being between nations.
Clearly identify at least three such factors that in your view should be included in the GDP calculations. Explain and illustrate how they will help to improve the GDP as a tool for measuring the well-being of a nation.

Explanation / Answer

Two factors, right off the bat are positive and negative externalities, and the third is contributions from the home. Firstly, positive externalities such as national defense protection for a neighborhood should be added onto GDP to exhibit a benefit on society and reduction in crime. Negative externalities, such as destruction of forests and oceans as a result of the production process should be subtracted from the GDP. It currently is not but has been projected to lower our actual reported GDP by nearly half. Lastly, work of hommakers and women who rear children should be considered. A babysitter get caounted in the GDP process but a mother or father watching their own children does not. In addition housekeepers get counted buy women who stay home and cook and clean the house are not counted. All three of these should be counted and if they were could portray a more accurate GDP. Hope this helps

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