GDP as a measure of economic well-being

Running head: MACROECONOMICS
Macroeconomics
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1MACROECONOMICS
Table of Contents
GDP as a measure of economic well-being.....................................................................................2
Response to Ruth Charles discussion..............................................................................................2
Response to Sara Snyder.................................................................................................................3
Reflective Journal............................................................................................................................4
References and Bibliography...........................................................................................................6

2MACROECONOMICS
GDP as a measure of economic well-being
Income or GDP is a quantitative measure used to capture economic well-being of a
person or the nation as a whole. Per capita GDP indicates expenditure and income per person in
an economy. As most people would like to get a higher income and support, a higher expenditure
per capita income or GDP appears as a natural measure of economic well-being of average
person for the country. However, several things are though related to well-being but are not
included in the GDP. One aspect that GDP does not include is leisure. If people in the economy
suddenly start working with taking less and less leisure then aggregate output or GDP will
definitely rise but at the cost of losing pleasure from leisure or cost of worsening health condition
of workers (Decancq and Schokkaert 2016). As GDP valued every good and services at market
price, it fails to capture activities taking place outside the market. GDP exclude goods or services
that are produced at home. For example, childcare provided at home are not counted in GDP.
GDP also excludes the quality of environment. The pollution making firms though contribute to
GDP by greater production but hampers quality of life by deteriorating air and water quality. As
GDP cannot capture all the aspects of well-being, it is better to use other measures for well-
being. One such alternative measure of economic well-being is Genuine Progress Indicator
(GPI). It assigns a value to the life-sustaining functions of the society and natural environment
such that destruction of these or replaces of these with materialized substitutes no longer appears
as gain or economic growth (Kubiszewski and Costanza 2015). Other alternative measures of
well-being include Human Development Index, Gross Sustainable Development Product and
such other.
Response to Ruth Charles discussion