Question

What does GDP per capita tell us about a nation's economy? What issues does conventional GDP methodology exclude?

Answer 1

Per capita gross domestic product (GDP) is a metric that breaks down the economic output of a country per person and is calculated by dividing a country's GDP by its population. Per capita GDP is a global measure for assessing nations' prosperity, and is used by economists, along with GDP, to analyze a country's prosperity based on its economic growth.Small, rich, and more developed industrialized countries tend to have the highest GDP per capita.

GDP counts all "bads" and "goods." After an earthquake occurs and requires repair, GDP decreases. It's counted as part of GDP anytime someone is sick and money is spent on their treatment. Yet no one can say we 're better off because of a catastrophic earthquake or people get sick.

GDP counts only goods passing through official, organized markets, so it is missing out on home production and black market activity. This is a major omission, especially in developing countries where much of what is consumed is produced domestically (or obtained through barter). That also suggests that if people start paying someone to clean their homes instead of doing so on their own, or if they go out to eat instead of eating at home, GDP continues to rise even though the actual amount generated hasn't changed.

Pollution charges are not calibrated to GDP. When two countries have the same GDP per capita but one has contaminated air and water and the other does not, well-being would be different because it will not be measured by GDP per capita.