Is GDP a good indicator to measure propsperity?

GDP is a very useful economic indicator but it isn’t the only one to measure prosperity. This indicator has been used to measure social welfare but many things important to the society are not included in the GDP. There are many examples that brings us to this conclusion. There are actions that although they are not included in the GDP indicator produce more welfare tan some others which increase the value of the indicator we are talking about.

GDP doesn’t measures the distribution of the welfare, sustainability, education, pollution, health, life expectancy, domestic work, volunteering… Even when there’s a catastrophe that should be repaired, the GDP measures the expense maid by this repair increasing the GDP.

So then, is GDP a bad indicator to measure welfare? No it isn’t. It is a good indicator to measure it, when it’s taken into account with some other ones, which do take care of the things stated in the upper paragraph.

Recent studies about the comparison of income and happiness from “La Caixa” had talked about the positive relation that both things have. The strange thing is that not always have the same intense causality. The happiness increases more when the difference between the incomes that one family gets in relation to the others is higher. This happiness increases but in a more intense manner when we talk about a poorer family. Once the income is higher, an increase of it doesn’t really get reflected on the happiness of them. That’s because despite money is necessarily to live, once the family can cover all their necessities they are happy, but then the goods that they can buy with that money, since are not completely necessary and they don’t really need them, there are lots more important things that they could get instead of more income, such as wealth, love, stability in emotional lives…

Another important statement founded on “La Caixa” report is the way unemployment harms happiness. As some studies show, unemployment makes us feel upset, but not that upset if everyone is unemployed. Of course our happiness does get affected by the fact that we are unemployed in Spain despite there’s 24% of unemployment, but a person who gets fired is more likely to become depressed if he is in a country were there’s a low rate of unemployment like EEUU, rather than a country like Spain.

written by: Marc Ramon Hernández