Date of Award

2014

Document Type

Research Paper

First Advisor

sal johnston

Abstract

Gross domestic product (GDP) is one of the most widely watched and reported statistic of economic assessment. It measures the market value of all final goods and services produced in a country for a year. The White House, Congress, the Federal Reserve, Wall Street and business all use it for various purposes for preparing the Federal budget to planning production and investment. It is clear that GDP is widely utilized by countries, international agencies and the popular media and is an influential factor in domestic and global policy, legislature and debate. The GDP is only a measure for economic activity and not the welfare of a nation. To understand why GDP should not be used as an indicator of progress or health, it is helpful to understand what variables are used to calculate GDP and thus what exactly GDP measures. The equation for GDP is very broad, its focus on spending does not account for many facets of an economy: the distribution of wealth, non-market transactions, non-monetary or black market activity, volunteering, quality of life, depletion of natural resources and externalities. Besides addressing the already existing issues with GDP, alternative indicators have the potential to influence policy dramatically. With a focus on well-being rather than growth, a number of benefits materialize: social welfare policies, which appeal limiting from a GDP growth perspective, will now present themselves as positive gains in well-being. A focus on alternative indicators that measure well-being can create the possibility of measuring the overall health of low, middle and high income economies, rather than just their expansion of contradiction.

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