Why GDP (Gross Domestic Product) is a Poor Measure of Wealth and Prosperity

I’m afraid that for too many people (especially politicians) this is an inconvenient truth. Most of them will be rubbing their hands in glee at the floods. storms, and other natural disasters causing people to spend mega trillions, on rebuilding and replacing. The cost of employing more and more officials who commission more and more enquiries resulting in financial institutions and other conglomerates requiring to hire more and more specialists to cover their butts while ripping us all off, must be improving our GDP all the time.

Alex Zorach's Blog

The Gross Domestic Product (GDP) is a measure of economic activity for a country as a whole.  GDP, and related figures like per capita GDP or inflation-adjusted GDP, are frequently referenced in economics and news sources, especially in the context of development economics, and especially in news sources discussing economic downturns or booms.  GDP is so dominant that the general term “growth” is usually implicitly assumed to mean growth of GDP.

Economics, contrary to popular belief, is not the study of money or financial systems per se, but rather, the study of resource use and distribution in human society.  Definitions of economics, including those in most mainstream economics textbooks, emphasize economics as the study of the choices people and groups of people make, particularly in contexts involving scarce resources.

If economics is to retain its place in academia and society as a legitimate social science, the economic discourse needs…

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