Question

1. The United Nations’ Human Development Index (HDI) is based on real GDP per year, life expectancy at birth, and indicators of the quality and quantity of education. Please explain why the HDI might be better than real GDP as a measure of economic welfare. Do you think the HDI should be expanded to include items such as pollution, resource depletion, and political freedom? Explain. (Word limitation: 250-400 words)

Answer 1

Answer - The GDP only includes the final value of the goods and services produced in the economy no matter how they are produced. This also gives the value of the income of the economy. But , GDP is purely quantitative in nature and is not a good measure of welfare.

In HDI , there are several measures counted such as the education , health , life expectancy which impact the productivity of the workforce of the economy and thus affect the GDP. Thus , apart from GDP , the education , health etc are considered in HDI and hence it is a better measure of the welfare. Factors such as pollution affect the health and living pattern of the population . The political factors , immigration , the freedom of doing any work affect the population and its ability to work thus enhancing their productivity. Hence , these are also the indicators of the well being and should be included in the HDI.