Clearly, GDP should not be solely used but with other all-inclusive indicators. There are several other alternatives proposed by economists, but William Nordhaus, 2018 Nobel Prize winner in economics, proposed the most influential one, “health economy”. That is, it does not accurately reflect how well the economy can satisfy the demands of households, firms and the government. GDP computed in this way is not a good measure of economic well- being. First, free time, or leisure is not included in GDP analysis. Please try again later. GDP was not designed to assess welfare or the well being of citizens. Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. Y e t, governments, businesses and probably most people swear by it. Richard Dobbs, James Manyika, and Jonathan Woetzel are directors of the McKinsey Global Institute, where Jaana Remes is a partner. Transformative change in technology is not easy to measure using GDP because so much of the benefit accrues to consumers. Economic growth also plays a role in reducing debt to GDP ratios. This article is excerpted from the McKinsey Global Institute report Global Growth: Can productivity save the day in an aging world? GDP • GDP is Gross Domestic Product • GDP is the total value of output of goods and services produced within an economy in … It measures how much money is changing hands in the economy. Statistical agencies, including the Bureau of Economic Analysis in the United States, have been continually refining the GDP-measurement system in recent efforts to improve insights into income distribution and consumer surplus. Global Growth: Can productivity save the day in an aging world. For further discussion, see the Human Development Reports, published by the United Nations Development Programme (UNDP) since 1990 (www.hdr.undp.org/en); the Millennium Development Goals reports, as well as the Beyond 2015 reports (www.un.org/millenniumgoals/reports.shtml); and the OECD’s Better Life Index (www.oecdbetterlifeindex.org). The GDP (gross domestic product) is not considered to be a good measure of economic well-being by many because it only measures the sales and income from economic purchases rather than looking at any moral implications. But Heritage Foundation expert Derek Scissors argues that GDP, which counts one year’s production, is a bad measure of economic health. Whether growth is measured by GDP or any other metric, its pursuit has real-world implications. The difference between economic growth and GDP is not a very distinct one since both are closely related. 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October 28, 2020