National income and welfare

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National income and welfare

Post by madhavi on Thu Apr 29 2010, 16:26

GDP per capita (per person) is often used as a measure of a person's welfare. Countries with higher GDP may be more likely to also
score highly on other measures of welfare, such as life expectancy. However, there are serious limitations
to the usefulness of GDP as a measure of welfare:

  • Measures of GDP typically exclude unpaid economic activity, most
    importantly domestic work such as childcare. This leads to distortions;
    for example, a paid nanny's income contributes to GDP, but an unpaid
    parent's time spent caring for children will not, even though they are
    both carrying out the same economic activity.
  • GDP takes no account of the inputs used to produce the output. For
    example, if everyone worked for twice the number of hours, then GDP
    might roughly double, but this does not necessarily mean that workers
    are better off as they would have less leisure time. Similarly, the
    impact of economic activity on the environment is not measured in
    calculating GDP.
  • Comparison of GDP from one country to another may be distorted by
    movements in exchange rates. Measuring national income at purchasing power parity may overcome
    this problem at the risk of overvaluing basic goods and services, for
    example subsistence farming.
  • GDP does not measure factors that affect quality of life, such as
    the quality of the environment (as distinct from the input value) and
    security from crime. This leads to distortions - for example, spending
    on cleaning up an oil spill is included in GDP, but the negative impact
    of the spill on well-being (e.g. loss of clean beaches) is not measured.
  • GDP is the mean (average) wealth rather than median (middle-point)
    wealth. Countries with a skewed income distribution may have a
    relatively high per-capita GDP while the majority of its citizens have a
    relatively low level of income, due to concentration of wealth in the
    hands of a small fraction of the population. See Gini coefficient.

Because of this, other measures of welfare such as the Human Development Index (HDI), Index of Sustainable
Economic Welfare (ISEW), Genuine Progress
Indicator (GPI), gross national happiness (GNH), and
sustainable national income
(SNI) are 3500 wheel bearing
global sourcing


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Re: National income and welfare

Post by srujanaa4 on Wed Aug 04 2010, 15:13

thank you for your info..



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