GDP is an imperfect measure of economic well-being because even though GDP represents the quantity of goods and services produced in a country, there are certain goods and services whose production remain outside the preview of the GDP i.e.
they are not taken in to account while calculating the GDP and thus GDP does
Why is GDP a good measure of economic well being?
GDP measures both the economy’s total income and the economy’s total expenditure on goods and services. Because most people would prefer to receive higher income and enjoy higher expenditure, GDP per person seems a natural measure of the economic well-being of the average individual.
Why is GDP not a perfect measure?
Increase in GDP may be influenced by inflation but not the rise of wealth since GDP measure value of total production. GDP measure does not include so many things that do not have monetary value attached to it. Economists measure total production by gross domestic product (GDP).
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