Why Gross Domestic Product Is Not A Good Measure For Human Well-being

Gross Domestic Product (GDP) is the market value of all final goods and services produced within a country in a given period of time. It measures a country’s total income and expenditure. Also, GDP per person show us the income and expenditure of the average person in the economy. It excludes the value of almost all activities occurs outside markets because it uses market prices to value goods and services. Although GDP is the main indicator of a country’s economic well-being and having a large GDP led us to a better life, GDP fails to measure main elements of well-being. There are many things contribute to a good life are left out of GDP. In other words, GDP can measure the standard of living but it is not able to cover relevant things to standard of living. Many reasons will be discussed and clarified why GDP is not a good measure for human well-being.

According to Sunstein GDP is certainly a useful figure, because it is linked to important social goals. If we mean income as an all-purpose as something people want irrespective of what else, they want-we could well attend to GDP. However, relying on GDP as a measure of well-being has several problems. GDP and well-being in the economy:

• For a number of reasons, the capacity of GDP to measure economic well - being is doubtful. First reason is Issues of distribution.
• If income is distributed unequally, a high GDP may disguise the fact that many people live lives that are bad or even desperate, second Goods and services excluded.
• GDP does not include freely available goods and services, including those plausibly linked to economic well-being, third unclear correlations with other significant economic indicators.
• For a number of indicators of economic well-being, GDP sometimes seems to be a general placeholder. But in fact, with some important indicators, it may not be closely correlated.

Based on the view of Bergheim and Schneider GDP is not an ideal measure for citizens ' well-being in different countries. Well-being and happiness depend on a lot of other things. That considers to be non-economic activity such as good health and education, a clean environment and safe streets. These elements are hard to quantify and aggregate, but their significance indicates that evaluating and tracking them might be worthwhile for those who determine economic policy priorities. GDP is an accurate and, above all, a specialized instrument designed to measure only a small segment of the activity of society. This is reflected in his fear that GDP's simplicity makes it susceptible to misuse: 'The human mind's valuable ability to simplify a complex situation in a compact characterization becomes dangerous unless it is controlled by definitely stated criteria. Especially with quantitative measurements, the definite outcome often suggests Ignore the accuracy and simplicity of the outlines of the measured object. Measures of national income are subject to this type of illusion and resulting abuse, particularly as they deal with issues that are at the centre of conflict between opposing social groups where the effectiveness of an argument often depends on over-simplification'. Because GDP measures only monetary transactions related to goods and services production, it is based on an incomplete picture of the system in which the human economy operates. This figure shows a more comprehensive picture of how the human economic system fits within the social and environmental systems it depends on.

According to James Boyd Green gross domestic product (green GDP) is supposed to account for nature's worth on AN equal footing with the economy. Many issues bedevil green gross domestic product, however. One is that nature doesn't return packaged in units like cars, houses, and bread. Even worse, green GDP requires mensuration of the advantages arising from public merchandise provided naturally that there are not any market indicators of import. Thus, what ought to green gross domestic product count? Ecological and economic theories are accustomed describe what ought to be counted — and what ought to not — if green gross domestic product is to account for the non-market edges of nature James Boyd answered the question why measure green GDP? For environmentalists, well-being provided naturally is as vital as well-being provided by market consumption. Societies ought to be able to see however market consumption affects the consumption of public product like lovely views, clean air, and clean water. After all, consuming fewer factory-made merchandise currently so as to ensure a lot of access to natural product and services later could also be in society's best interest. One more reason to measure green GDP is that environmentalists need to trace the supply of nature's benefits over time, either to carry governments responsible or to compare their environmental conditions with those of another country. These reasons also are why economists need to measure green GDP. Economists need society to articulate trade-offs, live performance, and maximize social well-being.