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GDP is the sum of all income earned in a country during a year. Alternatively, it can be thought of as the value of all production in an economy during a year. But do income and production measure happiness? The way we measure GDP can both overstate and understate people’s happiness and well-being. It understates economic activity and well-being when it doesn’t take into account production that is not exchanged in a market (grandma providing free baby-sitting) and leisure time. It overstates well-being when two otherwise identical activities are measured the same even though one produces more pollution.
Reply to these questions to begin your discussion:
Should we continue to measure GDP as we do now? After all, the current way of measurement has been used over time, so we can make historical comparisons. But are there problems with GDP that should be fixed? If you don’t think GDP should be changed, explain your reasoning. If you think it should be changed, what changes would you recommend, and why?
