Posted 3 years ago on Dec. 27, 2011, 4:08 a.m. EST by JadedCitizen
This content is user submitted and not an official statement
GDP per capita is not a measurement of the standard of living in an economy. However, it is often used as such an indicator, on the rationale that all citizens would benefit from their country's increased economic production. Similarly, GDP per capita is not a measure of personal income. GDP may increase while real incomes for the majority decline.
The major advantage of GDP per capita as an indicator of standard of living is that it is measured frequently, widely, and consistently.
The major disadvantage is that it is not a measure of standard of living. GDP is intended to be a measure of total national economic activity—a separate concept.
GDP counts work that produces no net change or that results from repairing harm. For example, rebuilding after a natural disaster or war may produce a considerable amount of economic activity and thus boost GDP. The economic value of health care is another classic example—it may raise GDP if many people are sick and they are receiving expensive treatment, but it is not a desirable situation.
Should we be demanding alternatives to GDP?
5 Excellent Alternatives to the Archaic GDP Measuring Stick
Genuine Progress Indicator
Quality of Life Index
The Legatum Prosperity Index
The Happy Planet Index 2.0
Human Development Index