Does Gdp Per Capita Provide a Satisfactory Measure Essay

1179 WordsDec 23, 20115 Pages
Essay number 1: Does GDP per capita provide a satisfactory measure of living standards in a country? To measure living standards in a country is to determine how material conditions add to the welfare of its population. Hence, it would seem essential that authorities possess an accurate way of evaluating standards of living, and make sure everyone has enough to live decently with. However, such an unambiguous method does not exist and economists are forced to use an approximation: income. Does GDP per capita provide a satisfactory measure of living standards in a country? To answer this question, we will divide our essay into two parts. In the first, we will seek to show that GDP per capita is generally a good measure of living standards. However, we will try to explain in the second the limits that make per capita GDP an imperfect measure of economic welfare. Growth Domestic Product (GDP) measures the value of goods and services produced in a country. Moreover, all that is produced must belong to someone, so it seems reasonable to assume that GDP is roughly equal to national income. GDP per capita is therefore the national income divided by the number of people: the income per head. It gives a general idea of income distribution in a country, and since most people would consider themselves “better off” as their income rises, GDP per capita is a fairly accurate way of measuring standards of living. In 2002 for example, GDP in the United Kingdom was 1.043 billion pounds. For that same year, population was approximately equal to 58.8 millions, so it can be measured that GDP per
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