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The GDP per capita is generally considered a proxy for welfare. What does it leave out?...

  1. The GDP per capita is generally considered a proxy for welfare. What does it leave out? What would you see being represented in a measure of well-being? Defend your answer.
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Answer #1

GDP leaves out:

- Income distribution of a country. Even though GDP per capita is high, still there are changes that few people may have larger proportion of overall total income.

- It excludes externalities such pollution, environmental damage etc.

- Ignores product quality and observe only the monetary value.

- Ignores growth sustainability

I would like to see Human Development Index (HDI) to be measured instead of GDP per capita. Because of the following reasons:

- gives more holistic picture of the economy by including education, health and overall income.

- Helps in identifying fundamental issues prevailing in a nation like health, education.

- Gives idea about areas of development which requires immediate attention.

- combines both social and economic indicators

**if you liked the answer, then please upvote. Would be motivating for me. Thanks.

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