The answer is that a large GDP does in fact help us to lead good lives.
In short, GDP does not directly measure those things that make life worthwhile, but it does measure our ability to obtain many of the inputs into a worthwhile life.
GDP is not, however, a perfect measure of well-being.
Is GDP a good measure of economic welfare?
GDP has always been a measure of output, not of welfare. Using current prices, it measures the value of goods and services produced for final consumption, private and public, present and future. (Future consumption is covered since GDP includes output of investment goods.) GDP is also an indicator of human welfare.
What is economic well being?
Economic well-being is defined as having present and future financial security. It also includes the ability to make economic choices and feel a sense of security, satisfaction, and personal fulfillment with one’s personal finances and employment pursuits.
Why is GDP a bad measure of standard of living?
GDP is an indicator of a society’s standard of living, but it is only a rough indicator because it does not directly account for 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
How can GDP be a misleading measure of well being?
The textbooks generally point out five problems with using GDP as a measure of well-being: GDP counts “bads” as well as “goods.” When an earthquake hits and requires rebuilding, GDP increases. When someone gets sick and money is spent on their care, it’s counted as part of GDP.