Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 8 The Data of Macroeconomics
Chapter 23 of 36 Measuring A Nation’s Income
Section 12 of 15
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Gross Domestic Product (GDP) has been called the best single measure of a society’s economic well-being.
GDP measures the economy's total income and total expenditure on goods and services.
Dividing GDP by the population number gives us income and expenditure of the average person.
Level of GDP and growth rate of GDP are main measures of economic well-being.
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Some say GDP does not measure quality of life.
People of some poor countries poll as being happier than people in rich countries.
So, why do we care about GDP?
In fact, a large GDP does help us lead a good life.
GDP does not measure our children’s health, but nations with larger a GDP can afford better healthcare for children.
GDP does not measure education quality, but nations with a larger GDP can afford better education systems.
GDP does not measure the beauty of poetry, but nations with a larger GDP can afford to teach more citizens to read and enjoy poetry, and allow more leisure time for them.
GDP does not account for our intelligence, integrity, courage, wisdom, or devotion to country.
But all these laudable attributes are easier to foster when people are less concerned about ability to afford life’s material necessities.
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