Some economists have attempted to come up with other measures. About 20 years ago, William Nordhaus came up with NEW (Net Economic Welfare) that took GDP and adjusted it for a bunch of things that were in it that shouldn't be and others that weren't in it that should be. He found those about washed out. He did not include income distribution.
The United Nations has a Physical Quality of Life Index (PQLI) that is probably closer to what you would like to see. It does a better job of dealing with income distribution, but not perfectly so. There are countries with low GDPs but high PQLIs. I mentioned Sri Lanka in my previous post precisely because it is such a one and also has a fairly equal distribution of income by such measures as Gini coefficients and decile ratios, etc.
There have been some more recent efforts by other economists to come up with such measures, although many of these measures are subject to criticisms for alleged arbitrariness, etc.
Personally I think that looking at per capita GDP is pretty useful. But I also certainly want to look income distribution measures and also some more specific physical indicators such as life expectancy, level of womens' education, and so forth. Doing that one can get a pretty good picture of what is going on in a society. GDP is not the whole picture, and it has many problems, but it is very far from being useless. It tells one quite a lot. Barkley Rosser -----Original Message----- From: chang <chang at public.shenzhen.cngb.com> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Friday, September 03, 1999 1:08 PM Subject: Re: GDP is unscientific and unfair for poor people.
>Date: Friday, September 03, 1999 5:04 AM Barkley Rosser wrote:
>
>>Ju-Chang,
>> Wojtek is completely right. There are many
>>problems with GDP as a measure of the material
>>standard of living, with the non-counting of non-
>>marketed activities being one of the most important
>>ones. GDP does not measure income distribution
>>and this is widely known.
>> There are measures of income distribution that
>>can be looked at, such as the Gini coefficient or
>>the decile ratio (the latter is the ratio of what the
>>richest 10% earn compared to what the poorest
>>10% earn). Certainly anybody who wants to know
>>what is happening in a society should look at both
>>changes in GDP (overall output) and changes in
>>income distribution.
>
>
>Why do economists have no other standard of measure indicating the living
>standards of poor people?
>
>The heart of the issue is what economists use GDP to measure, the whole
economy
>condition? or just the volume and the production of goods for market and
their
>sale?
>
>It is very clear that economists use GDP to measure the whole economy
condition,
>not just the volume and the production of goods for market and their sale.
>
>When there is a large GDP and a high growth rate, they will say that the
economy
>is
>great and the financial officer will be proud of it although the living
standards
>of poor people is very bad and needs increasing. They don't pay any
attention to
>the living condition of poor people. So there is no need for the government
to
>raise the living standards of poor people. Therefore GDP as a measurement
of the
>whole economy condition is unscientific and unfair for poor people. GDP is
for
>the rich to hoodwink poor people's eyes.
>
>Sincerely,
>Ju-chang He
>
>SHENZHEN, P.R. CHINA
>Welcome to My Homepage
><http://sites.netscape.net/juchang/>
>
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