Per Capita GDP Definition

Is GDP per capita

You may have heard about a way that is necessary for analyzing the health of an economy or examine economic growth in a country. The one that economists are mostly using is the concept of gross domestic product also referred as GDP. According to Investopedia, GDP represents the total dollar value of all goods and services produced over a specific time period, often referred to as the size of the economy. Now, is GDP per capita an adequate indicator of human well-being? GDP per capita can be both a good and bad indicator of human well-being at the same time. However, this essay will argue that it is mostly a poor measure of human well-being.

In first place, let’s talk about the positive side of GDP per capita. As you probably know, GDP per capita is considered the best economic indicator right now.

In second place, GDP per capita is mostly a poor measure of human well-being. Just as Steven A. Greenlaw, David Shapiro and Timothy Taylor are saying in their book Principles of Macroeconomics, “GDP is an indicator of a society’s standard of living, but it is only a rough indicator. GDP does not directly take account of leisure, environmental quality, levels of health and education, activities conducted outside the market, changes in inequality of income, increases in variety, increases in technology, or the (positive or negative) value that society may place on certain types of output.” (chapter 6.5). For example, when GDP per capita is rising, there is two options that we must face. Let’s say that GDP per capita rises by 10%, it could mean that GDP for every single person has rise of 10% which is really good, or it could also mean that only certain groups are having a high rise in GDP and the others only a little rise or even a decrease in GDP . This is where we can see that GDP per capita do not take account of inequality in society. Likewise, GDP per capita can counts spending on education, but is not including levels of education which is people who are not able to read, write and do basic stuff. In addition, a serious YouTube video, publish by Marginal Revolution University, is saying that “GDP per capita is far from perfect. Here’s one problem: GDP per capita misses the distribution of income.” For example, they are making the comparison