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| Is a High GDP Everything?
Did you know that in 1991, the U.S. GDP was five
times higher than that of France? Does this mean that Americans
are “better off” than the French? Not necessarily. What
if a family of five had $50,000 a year to live on? Compare that with a family of three with $40,000 a year. The family of five has more money altogether. But, the family of three has more money to spend per person. Which situation would you choose?
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What Is Left Out?
Sometimes figuring out the GDP can be tricky! There are
a few things economists simply do not calculate or take into consideration.
What kinds of things are omitted from the
GDP measurement?
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1. |
Unpaid
work by individuals for themselves, their families, or other
people are not part of the GDP. The government cannot estimate this
kind of work accurately. Mowing a lawn or baby-sitting for free could
fall into this category. |
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2. |
Used products are not figured into the GDP. Why not? A used
product will have already been counted when it was originally produced.
Economists do not want to count it again. |
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3. |
Sometimes
the exchange of goods and services takes place, but there is no
record of a transaction. How can economists know about a purchase
when it is made with cash and there is no receipt? There would be
no evidence that the transaction ever
happened. |
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4. |
Illegal
goods and services are not included. For something to be counted,
it must be a legal good or service. When an illegal purchase is made,
there is usually no receipt to go along with it. |
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