Question

The United Nations’ Human Development Index (HDI) is based on real GDP per year, life expectancy at birth, and indicators of the quality and quantity of education. Please explain why the HDI might be better than real GDP as a measure of economic welfare. Do you think the HDI should be expanded to included items such as pollution, resource depletion, and political freedom? Explain. (Word limitation: 250-400 words)

Answer 1

Answer - GDP of the economy is the measure of the final value of the goods and services produced within the domestic borders of the economy. It is a fully quantitative phenomenon and does not include the factors like education level , health status etc which are essential for the well being of the person. Hence only GDP as a measure of economic performance cannot be regarded as ideal. It is not the measure of the welfare due to the absence of many qualitative factors.

The HDI includes factors like education , health , life expectancy and also the GDP. But factors like pollution level , resource depletion affect the living pattern of the public. They affect the social well being. Thus , these factors should also be included in HDI in order to be more accurate.