Question

Your initial post should be between 300 - 425 words. This week's debate question is as follows:

"Is the Gross Domestic Product a good measure of how well the economy is doing?"

Answer 1

GDP is defined as the total value of all the goods and services produced over a specific time period within the country domestically. So, GDP per person can be used to tell us the average income and expenditure in the economy. It is a natural measure of the well-being of the economy since most people are likely to enjoy higher income and higher expenditures.

Yet, there are some disadvantages when we take GDP as a measure of the well-being of the economy. Some economists argue that GDP does not capture the overall health of the economy, the quality of education, the wisdom or intellect of the people. However, it can be debated that a country with higher GDP can afford better health care programmes, higher quality of education and would obviously have a positive impact on the intellect and wisdom of people in the economy.

However, there are some factors which are not captured by GDP. One example is leisure. Suppose everyone in the economy stopped enjoying in the weekends and worked every day of the week. So, GDP would definitely increase, as the amount of goods and services produced in the economy rises. But the loss from reduced leisure is not captured by the GDP. GDP does not take into account the quality of environment. For example, if the government removed all the regulations of the environment. The firms would then produce goods and services without caring about the harmful repercussion on the environment. So, despite the increase in the country’s GDP, the well being of the economy would decline because of the decline in the air and water quality. GDP also does not consider the distribution of income in the economy or the household services that take place outside the market.

So, we can conclude that though GDP is not a perfect measure of the well being of the economy, it is an adequately good measure. It is to be kept in mind what is included or excluded in GDP to gauge how fit it is to measure the well being of the economy.