GDP is the most common measure of economic progress; indeed, the release of this number is a big deal in the media, and dominates the news headlines over several days. Entire economic policy choices are made using this number...Presidencies have collapsed because of this number.
What if it's wrong?
All statistics are, to some degree, inaccurate (the old saying "lies, darn lies, and statistics"), but they are at least supposed to somewhat mirror reality. However, the very way that GDP is calculated might make it an inaccurate and not very useful measure of economic prosperity.
Please read the following article on GDP and answer the following questions:
- How is GDP computed?
- What are some things which would improve GDP that do not necessarily benefit society?
- According to Nic Marks, why is GDP an obsolete measurement?
- What are some alternative ways of measuring GDP? What arguments do the proponents make?
- What is your view of GDP? Is it an okay measurement of a country's economic health, or is outdated? Explain. (Note: for guidance, here is a list of countries ranked by GDP per capita. Look at the countries near the top and bottom...is there a discrepancy between their GDP and the country's "livability"?)
Your first post will be due by Saturday, February 4th by midnight. The second post will be due by midnight on Sunday, February 12th.
20 comments:
One way GDP is computed is by adding the final prices of consumer spending, investment, government purchases, and net exports. It can also be computed by summing the total national income of all people and businesses.
When prices get higher for necessities such as food or health care, the GDP is raised, but people are not benefitted because they simply have to pay more. It appears that the country is more prosperous, but in reality it is not economically better off.
According to Nic Marks, GDP is not a good measure for the purposes in which it is applied because it measures quantity as opposed to quality. It does not convey the happiness and wellbeing of a country's people.
I do believe the GDP is outdated because it does not measure the happiness of a society. Americans tend to believe that goods and services equate to happiness, which is probably one reason our GDP is as high as it is. However, on the list of happiest countries, the United States is ranked 14, below many small countries with relatively low GDPs (Forbes). In my opinion, a measure of happiness combined with economic production such as that of the HPI is far more valuable than a primitive measure of how much stuff is made.
The gross domestic product (GDP) is the final market value of all goods and services produced in a country in one year. It can be computed by adding all spending from different segments of the economy, consisting of consumers, investment, government, and net exports. It can also be totaled by adding up all of the income received by businesses and individuals in a given year.
An increase in demand of products, but not the price of the product, would increase GDP. More spending would also improve GDP. GDP would rise with other nations investing in products in America.
Nic Marks considers GDP an obsolete measurement because it does not factor in the environment. He believes that we should be calculating progress in terms of what is important at present time. World War II called for massive production, which in Marks’ opinion, no longer exists.
Marks supports the Happy Planet Index (HPI). HPI includes economic and social well-being. The social portion contains life satisfaction and environmental costs. The Human Development Index (HDI) involves life expectancy, literacy, and standard of living along with GDP. The Genuine Progress Indicator (GPI) integrates income equity, pollution, and access to health care.
GDP is still valuable. It was never responsible for including the well-being of people. It specifically looks at the economics. Now, measuring how society is doing on environmental issues and quality of life is useful, yet separate from what GDP is for. GDP does not cover all possible aspects of a nation’s improvement. That would be extremely complicated. People have different opinions on what determines a nation’s success.
GDP is measured by adding all of the spending from all segments of the economy. Net exports from our country do not benefit us directly. The Gdp was very useful during world war two because at that time production need to be at a level to manufacture all of the supplies for war. Hpi is an alternate method that measures absolute happiness among other things. It can show how the residents of the country truly feel which is crucial to success. The HPI strives to help create a better future not just worry about an outdated method. I think GDP is an old way of calculating a country's success that is now obselete. For instance the GDP is up now but unemployment is still high and many Americans are distraught. The hpi and cpi are better ways of calculating the success.
GDP = C + I + G + (exports - imports)
Amount of money spent on health care would raise the GDP, but that would mean that health is declining which is not good for society.
Nic Marks, a wacko environmentalist, says that GDP is obsolete because it does not take into account the effects of production on the earth, but only measuring production.
The HDI and HPI are alternate ways of measuring GDP. The proponents of HDI say that it adds life expectancy, literacy, and and standard of living determined by the GDP. The proponents of the HPI say that it deals with the effects of production on the environment, not just tracking the size of production.
I personally think that GDP is effective for its purpose. It was not meant to measure the ecological effects or how it made people smarter. It is effective for the definition of what it does. It will always have its purpose for measuring solely production within a country.
GDP is calculated by summing the market value of all goods and services produced inside a nation. GDP is an obscure measurement because it does not measure quality of life, ecological footprint, health, education, public infrastructure, fuel efficiency, or happiness. Rising health care costs, for example, add to GDP, but are not socially beneficial. Some alternatives to GDP include the Calvert-Henderson Quality of Life Indicators, the Human Development Index, the Genuine Progress Indicator, and the Happy Planet Index. These measures are considered by some scholars to be superior because the also measure life expectancy, literacy, happiness, and standard of living, and because they do not average production like GDP (the production average obscures the gap between rich and poor). I believe that GDP is still a useful measurement for representing economic power, not however, for measuring per capita welfare because of those metrics it does not take into account.
GDP is calculated by summing the market value of all goods and services produced inside a nation. GDP is an obscure measurement because it does not measure quality of life, ecological footprint, health, education, public infrastructure, fuel efficiency, or happiness. Rising health care costs, for example, add to GDP, but are not socially beneficial. Some alternatives to GDP include the Calvert-Henderson Quality of Life Indicators, the Human Development Index, the Genuine Progress Indicator, and the Happy Planet Index. These measures are considered by some scholars to be superior because the also measure life expectancy, literacy, happiness, and standard of living, and because they do not average production like GDP (the production average obscures the gap between rich and poor). I believe that GDP is still a useful measurement for representing economic power, not however, for measuring per capita welfare because of those metrics it does not take into account.
GDP is calculated either by adding together the prices of expenditures (in all segments of the LEGAL economy)or by adding together the income of businesses and individuals. If you do it right, they're supposed to equal each other.
Improving the GDP (which seems to be the goal of most countries) isn't necerssarily beneficial to the people living in the country. For example, if we raised prices of necessities, such as meat and ipods, we would increase our GDP at the expense of millions left hungry and unable to run on treadmills. And if that path is taken, you wind up basically living in East Asia (and not in Japan). But that's not the only problem with this calculated goal.
Nic Marks, this really bro economist, says GDP is "an obsolete measurement" because it only measures what is being produced; this doesn't account for consumption. He also reminds us that these two factors aren't the only factors we care about now. We care about the enviroment (well, some do) and we care about ethical, social, tech, etc. progress.
Marks seems to advocate for HPI (Happy Planet Index) because I think he's really sick of seeing GDP be a meausre of how "good" a country is. This would take into account things like ecological footprint and, very importantly, consumption of goods. Also, Gallup would use its power of mostly unbias data to help calculate if a country is actually "funding a better future." Yay. Another method is HDI (Human Development Index)It would be similar to GDP with regard to production, but it would include all that junk from the CIA World Factbook like child mortality and percentage of people living with AIDS. Let's be fair, even if Sudan decides to distribute government wealth to citizens to increase GDP per capita, they shouldn't look like a better country unless they're gonna decrease the illiteracy rate or the number of female castrations.
To add my input and break my string of passive agressive attacks on GDP, I'm gonna outright say that I think it sucks.
My number one reason? CHINA is number THREE. China sucks- any country that blocks out google within its borders and kills Catholics associated with the Vatican sucks. And really, the EU is number one? If you don't take into account that the currency of a country (or supranational organization) is failing, then you can't properly say they're doin' fine, can ya? And why is Italy, a country on the brink of bankrupcy, in the top ten? Because they make really fancy cars and sell top dollar machinery.
And consider Moraco- low infant mortality& the highest life expectancy in the world. They are very near the bottom. Yet they also have negative population growth- which is sweet because our world is spacially limited. This is a GOOD country, unlike Iran, who happens to be number eighteen. Iran meets many of my other qualifications for being a sucky country- like having a leader that denies the Holocaust actually happened and who says there aren't gay people in his country.
Counclusion? GDP does NOT equal livability and is therefore invalid to me.
GDP measures a market's activity and growth. It is measured by calculating the price of all goods and services produced within a nation's boundaries. But, some things improve the GDP of a country and are not helpful for society at the same time. For example, if prices of health care go up, GDP is raised, but this isn't good for the citizens of the country. According to Nic Marks, GDP isnt always the best way to figure out how well a country is doing. It need to take into account more factors including the standard of living, progress of health and education, income equity, and even pollution and efficiency. An alternative way of measuring GDP is the Happy Planet Index, which considers social well-being and life satisfaction. Also, HPI measures "the delivery of good lives rather than the delivery of more goods." I do not necessarily think GDP is the best way of comparing countries. The main reason for this is prices of health care are bringing America down but our GDP up.
GDP is computed by the total value of all goods and services produced within the boarders of a country.
Rising health care cost would increase the GDP, but would fail to calculate the harm caused to average American family that has to pay more for health care policies.
Nick Marks believes that the current method for calculating the GDP is obsolete because it fails to calculate the ecological footprint created through a nation's industry.
Proponents of the current GDP system may believe that as more products are created and sold in markets, it directly reflects the consumers ability, and desire for obtaining those goods.
My view is that it is a useful tool, but by no means is it the end all be all of measuring a nation's economic status. I believe new factors such as the national average for salaries, mortgages, and college tuition should be factored into measuring a nation's economic standing.
The GDP is computed either by summing the total income of people and businesses in a nation or adding the prices of consumer goods, government spending, investment, and net exports.
The GDP can be deceitful since a simple increase in prices can lead to a heightened GDP. This gives the illusion that the country is producing more when really this is not the case.
According to Nic Marks, GDP is not a good measure because it does not account for the quality of goods and services, but rather it focuses on quantity. Nic Marks insists that the HPI is a far better alternative to measuring a nation's success and its population's well-being.
I would agree with Nick Marks that GDP is quite antiquated. The amount of stuff that a country produces should not be equated to that nation's overall happiness. The HPI, in this instance, is far superior. Many factors play a role in a nation's success and standard of living, and GDP simply doesn't account for that.
GDP is the value of everything sold inside of a country. Another way GDP is determined is by adding up the income of everyone in a country. If a country was to raise the price of necessities such as insulin the GDP would increase but that would not benefit society. Nic Marks said that GDP is an obsolete measurement because it determines the quantity produced by a country but not the quantity consumed by a country or how happy the people are in the country. Other measures of a countries suce
GDP is computed by measuring just the amount products and services that are sold inside of the United States measured in dollars. One example of something that could improve GDP but not benefit society is welfare. Even though families have to pay more money to raise it, it counts as a rise in the GDP. GDP was used during World War 2 and during the reconstruction and during that time it was really important to increase the amount of products made in the country. But now it is more important to see how many products are being bought inside of the U.S. AN alternative is HPI which measures the economic and social wellbeing of people instead of just the economic wellbeing of the entire country. I think GDP is an outdated way to measure growth. I do not think some of the things that are currently counted as GDP should count, such as wellfare. I also think the things that are included in HPI is more important because even if there was more money it would be better to have a higher life expenctancy with more life satisfaction.
GDP is computing by adding the market prices of all goods and services produced by a country. It can be a poor predictor of societal improvement because certain things that raise GDP do not benefit society. Health care is the example used in the article, when prices go up so does GDP, but this is bad for families in the United States.
According to Nic Marks, GDP is an obsolete measurement because it does not measure progress. It solely measures the amount produced, as opposed to the quality of the things produced and how these products have changed over time.
One alternative to GDP is HPI (Happy Planet Index), which adds well-being and satisfaction to economic productivity. This would be acceptable for those people who think that GDP does not take social well-being into account. Many people argue that GDP is a poor measurement of progress. This may help account for progress.
I think the use of GDP is outdated. It does not account for the progress countries make or how the people are satisfied with economic production. GDP goes up for reasons that do not necessarily mean that a country is being more productive or more successful. We could still use GDP to measure the quantity of good and services, but we should use a different method to figure out the progress we are making and how the people feel about production.
GDP is computed by either adding up all spending from different segments of the economy or adding up all income received by businesses and individuals in a given year. One way to improve GDP that would negatively affect people would be increased medical bills. Also if the government purchases submarines it increases GDP but has no effect on citizens. According to Nic Marks, GDP is obsolete because it was created during WW2 when production was very important, and needed to be measured. An alternate measurement system is the Happy Planet Index (HPI), which combines economic metrics with measurements of citizens well being. This system takes into account how people are affected by production growth or falls. I think that GDP could work if it wasn't so easily skewed by government purchases and that it doesn't reflect citizens well being at all.
GDP is Gross Domestic Product and, as such, is computed by adding up the final value of all goods and services sold in the country. This obviously requires surveys and estimations due to the scope of the measurement.
According to the article, the rising cost of health care is an example of the how "good for the GDP" doesn't always mean "good for the people." That's a valid example if he's talking about nominal GDP, but real GDP, which I would assume we generally use in assessing growth, negates the effects of inflation. A specific example isn't really needed, though, because GDP doesn't measure quality of life.
Nic Marks claims that GDP is obsolete because production is no longer a useful reflection of our progress as a nation. We now have (or should have) different goals which should factor into our assessments of progress.
The main alternative seems to be HPI, which measures "the degree of human happiness generated per quantity of environment consumed." Proponents claim that it's a better measurement for the current era.
GDP definitely has it's uses, as it measures the productivity of a nation. The issue, though, is that it just measures the productivity of a nation. Obviously that makes it a great indicator of economic health; after all, economics is all about making more stuff. The problem with GDP is just our obsession with it. We may be the economy, but the economy isn't us. In measuring our progress as a nation, we should be looking at multiple figures that represent human goals such as environmental impact, happiness, and health. GDP just needs to be seen as what it is and not as the be-all, end-all indicator of progress.
Gross Domestic Product is calculated using an equation that basically conjoins national and government spending and purchases, imports, and exports in a year's timespan. "The GDP suited a different era and now we need a metric for our times," said Nic Marks, a very important British economics guy, meaning that the gross domestic product was meant for WWII economy, not our current. An alternative way to calculate the nation's revenue, so to speak, is the Happy Planet Index (HPI). This method goes as follows: economic metrics and subjective measures of life satisfaction are combined to create a general assessment of national economic well-being. It's just as simplistic as the GDP, while more indepthly analyzing the "happiness" of a citizen's wallet. Based on what we learned in class, GDP doesn't satisfy my needs for a correct assessment of the nation's economic successes, due to the outliers in purchases throughout the year. The GDP should focus on the purchases that directly affect the general public. We should be more like Costa Rica, and try to achieve a better HPI so we can have long life expectancies too.
GDP is calculated by adding up all the final prices of goods purchased in the country. GDP is not a very accurate measurement because you are not taking into account the quality of life of a person in the country. A alternate way of measuring GDP are HDI and HDP. These methods are much more accurate because things like life expectancy, happiness, and standard of living. According to Nic Marks, GDP is not a good way to measure a countries well being because it takes into account quantity, and the price of things, but not the quality of the goods. I would have to agree with Nic Marks because a countries wealth should be based on how the people of that country are living and how happy they are with the quality of life they are living.
There are two ways to calculate GDP. One is to add all spending from different segments of the economy while another is to add up all of the income received by business and individuals in a given year. Some things which would improve GDP that do not necessarily benefit society can be an increase in the cost of healthcare. The price increase helps to boost GDP but makes it harder for the average person to obtain healthcare coverage. According to Nic Marks, GDP is an obsolete measure because it "suited a different era and now we need a metric for our time." Some alternate ways of measuring GDP are Human Development Index (HDI) and Happy Planet Index (HPI). Proponents of HDI such as the UN say that HDI will help track "life expectancy and literacy as well standard of living as determined by GDP." This shows more than just how much stuff a country makes. Proponents of HPI look at the "degree of human happiness generated per quantity of environment consumed." They also say that "HPI is striving to make a better future." I think that GDP is outdated and although countries with a high GDP per capita may have a high standard of living, that does't mean that all of their people are taken care of or happy. And isn't being happy what it is really all about?
GDP is the final market value of all goods and services produced in a country in one year. It can be computed through the expenditure approach which adds up consumer spending, investment, government spending, and net imports. It can also be computed through the income approach, which adds up all of the income received by businesses and individuals in a given year.
Increasing the prices of goods would increase the amount of money consumers spent and the overall GDP, but if the prices rose goods that are necessities, then it would simply mean people are paying more for things and it is not really socially beneficial.
Nic Mark believes GDP is obsolete because it simply measures production (which was useful when it was created during World War II) when it should be measuring consumption.
The Happy Planet Index or the Human Development Index. The HDI considers life expectancy, literacy and standard of living determined by the GDP. The more promising alternative is the HPI because it "assesses social and economic well-being in the context of resources used, looking at the degree of human happiness generated per quantity of environment consumed." In my opinion the HPI is probably the best alternative to GDP. GDP has grown obsolete and all countries are trying to do is raise it so their political leaders can say they are making their economies stronger when their people are not having a better standard of living. Although HPI seems as if it is a better idea, I believe it may run into problems when trying to measure the "happiness" of a population.
GDP is the final market value of all goods and services produced in a county annually.Rising costs in health care positively affect our country's GDP but negatively affects society. The GDP is considered an obsolete measure because they're are many aspects of a country that the GDP neglects in its calculations. For example, many country's rank themselves based on their GDPs, but the system neglects "the general progress in health and education, the condition of public infrastructure, fuel efficiency, community and leisure." Proponents, however, say that the GDP is an effective estimate of the total circulation of money within a country, indicating the varying degrees of economic prosperity for countries. Personally, i believe there are a lot of factors that should be considered when determining a country's efficiency alongside the standard GDP measurements. The HPI ranks Costa Rica above the U.S.A, yet there is a clear consensus that we're #1! USA!!!!!!!!!!
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