Question

While campaigning for the US presidency on 18 March 1968, Senator Robert Kennedy gave a famous speech.

Read his speech in full (http://tinyco.re/9533853) or listen to a sound recording (http://tinyco.re/6486668) of it.

Answer the following questions (1-3) based on Kennedy’s speech:

In the full text, list (using bullet points) the goods that he mentions as being included in a measure of GDP.

List (using bullet points) the goods that he mentions as missing from the measure of GDP.

Do you think GDP is an appropriate measure for living standards in a country? Why or why not?

Answer 1

the goods that Senator Robert Kennedy mentions as being included in a measure of GDP.

• air pollution
• cigarette advertising
• ambulances to clear US highways of carnage.
• locks for our doors
• jails
• destruction of redwood
• napalm
• nuclear warheads
• armored cars for the police
• Whitman's rifle
• Speck's knife
• the television programs which glorify violence

The goods that Senator Robert Kennedy mentions as missing from the measure of GDP.

• health of of our children
• the quality of children's education
• the joy of Children play
• the beauty of our poetry
• the strength of our marriages
• the intelligence of our public debate
• integrity of our public officials
• neither our wit nor our courage
• neither our wisdom nor our learning
• neither our compassion nor our devotion to our country

GDP per capita is a useful measure as a summary indicator of living standards in a country, since Gross Domestic Product measures the market value of all final goods and services produced within a country in a given period of time. Using GDP per capita as a way of measuring standard of living is useful because it is a quantitate measure that can be used to get a basic understanding of otherwise qualitative factors that contribute to higher living standards, such as wellbeing, quality of life, and happiness. Economists have a fairly developed understanding of GDP per capita as it relates to wellbeing, and typically better economic situations have a strong correlation to higher living standards.

That being said, GDP per capita isn't very useful if used alone, so although it can measure living standards to a certain extent, that scope is very limited as one cannot measure living standards simply through monetary terms. There are several- economic and otherwise- shortcomings of using GDP per capita as a singular metric to assess standard of living. For example, real GDP per capita doesn’t acknowledge aggregate labor productivity in terms of unpaid labor. For example, the value of housework, child care, elder care, volunteer work, and community service cannot be factored into GDP per capita because those forms of labor are unpaid, even though such labor does have varying influence on living standards. Also, GDP per capita doesn't give an accurate picture of wealth distribution, and now that the top 62 people are worth more than the bottom 3.5 billion, that highly skewed distribution is an important indicator of living

standards, especially in countries with high income inequality. The possibility that a large share of the gains in real GDP per capita will go to a relatively small percentage of the population means that average individuals are not as well off as the data would otherwise suggest. Empirically, countries with higher standards of living generally have more even wealth distribution along socioeconomic levels. Real GDP per capita also doesn't take into account human conditions as the metric doesn’t factor the value of things like leisure, environmental conditions, congestion, and space.

The way that economists and other social scientists classify living standards and human development today is through the composite Human Development Index. This is, so far, the best quantitate metric for assessing living standards. In addition to real income per capita, the HDI includes in its composite metric life expectancy and education. (The HDI's income measure is actually gross national income, which takes into account total domestic and foreign output claimed by residents of a country).

All in all, while GDP per capita does measure living standards to a certain extent, it is not a good idea to use it as a singular calculus, as it does not take into account certain non-tangible and non-monetary factors that do contribute to standard of living. As of now, the HDI is the best alternative as it is a composite metric and quantitative, but other alternatives could be qualitative in nature, such as surveys or self-reports of individual happiness or wellbeing. These pose their own statistical problems, and are also difficult to objectively measure. Other alternatives, such as the Index of Human Progress (which focuses more on social progress), and others have emerged to fix the problems that arise with measuring economic factors, but as of now the HDI remains the widely used composite standard to measure living standards.