An interesting article in the New York Times (August 30, 2008) covers some of the issues we discussed today in terms of GDP as a measure of well-being.
An important point that we did not cover in class is that GDP or its average (GDP per capita) does not reveal anything about the distribution of income. So, for example, two countries could have GDP per capita of $50,000 as follows:
Country A, population 300,000:
100,000 people with income = $30,000
100,000 people with income = $50,000
100,000 people with income = $70,000
Country B, population 300,000:
299,999 people with income = $1,000
1 person with income = $14,701,000,000
Both have the same per capita GDP, so look the same on paper.
But, where would you rather live?
What else does GDP not account for?