Although the GDP was not developed to measure the level; of welfare of a society it has been often used to imply that a larger GDP/Capita means a better quality of life. There have been many efforts over the years to adjust the GDP and/or modify it is such a way as to make it responsive to some of the criticisms leveled at it.
One of the most successful efforts at creating an alternative measure of welfare is the Human Development Index (HDI) that was introduced 20 years ago. The HDI is a relatively simple index that combines the money measure of the GDP/Capita, life expectancy at birth and degree of literacy to rank countries relative to the combined score that they attain. Obviously the highest possible score is 1. This kind of ranking raises the importance of heath care services in addition to education but it deemphasizes the role of money income as the most important factor in determining the quality of life. The final rankings demonstrate clearly that it is possible to have a relatively low GDP/capita and yet enjoy a high quality of life if the access to health care results in longer and healthier life combined with a high degree of literacy.
Those among you who are interested in the latest such report by the UNDP should visit the following web site for the full report and all its data:
http://hdr.undp.org/en/statistics/
Components of Consumer Price Index
The Bureau of Labor Statistics provides the following description of the major eight categories and 200 categories that are currently used in computing the CPI.
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Major groups and examples of categories in each are as follows:
* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
* APPAREL (men's shirts and sweaters, women's dresses, jewelry)
* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
* MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
* RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
* EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
* OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses)."
10 comments:
The GDP has always been used as the primary way to measure the way of life. However it is pretty surprising to know that it is not a very efficient measure. The new measure HDI actually takes into account a lot of aspect which the GDP does not. The GDP only concentrates on the money measure per capita. This however does not determine the way of life. Many other things such as health care, education, apparel, and other goods have a lot to do with the way of life in any country.
I hope that in time the HDI comes into effect so that it is the predominant measure of the way of life. When thinking about it, the GDP really does nothing, but measure the amount of money a person takes in, and spends a year. This I don't think is very useful. In comparison to other countries, I agree that the US GDP is rated as one of the ones on top, but when considering other aspects, the US way of life is not measured as the top one.
I think the HDI would be alot more usefull than what we have now with GDP. GDP on calculates the amount of money coming in and going out. HDI can be used in many other helpfull ways.
HDI is definitely more accurate than GDP. It emphasizes the importance of education as well as healthcare. However, it should also still take money income into consideration. The lack of income could be the cause of the lack of education in a specific area of the US.
The GDP, although seen as an effective measure, has gray areas to it. The components of the consumer price index which includes food, clothing, shelter; are all essential things that the community needs in order to survive. The HDI is the most prominent aspect of the economy.
I feel that the HDI is a much fairer and more realistic system to rank a country's welfare by. In my opinion, healthcare is extremely important, as is literacy. The quality of life somewhere is not just about how much money that place has.
Even though the GDP has been used to measure the standard way of life, it is not the most efficient way. I believe that HDI measures more of the factors of an individuals life that matters such as education, health care, apparel, and other everyday goods that measure the way of life that is more important then just measuring the amount of money one make in a year.
The HDI takes into consideration of all the vital components of measuring the way of life which i feel is much better than measuring the GDP.
Information from measuring the GDP could lead to a stereotypic thinking about a country. Just because a country has a high GDP doesn't mean that they live a better way of life with good health care; live a long life. A country can have a low GDP but it could have very good health care and education.
The HDI is a much more accurate way of determining the quality of life. Education and healthcare are more important than the amount of money an individual earns and spends.
I also agree that the HDI is more accurate than the GDP, and everyone should begin using that instead of the less accurate measure. Quality of life depends more on education and health care than incomes of households, and the measure of the quality of life should reflect that.
I believe that HDI is a much more accurate way to measure the quality of life of the average person for any given country. The main issue that arises with GDP is the discrepency in the quality of life between the rich and the poor. Since GDP is an average for an entire nation, that mainly takes economic capability into account, it fails to considers such issues as literacy and inequality. Thus, since HDI considers much more variables in its calculations, it is more accurate than GDP in determining the average quality of life in a specific country.
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