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Essay Time M7 ManEco

GDP data provides useful information for comparing social well-being and economic performance across time periods and nations, but it also has important limitations. It can track changes in national output and income, but excludes key factors like environmental quality, health, education, and income inequality that also influence well-being. Directly comparing GDP values between nations or time periods with different currencies or populations can also provide misleading results. A more comprehensive analysis is needed to fully understand social and economic progress.

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Marie Sheryl Fernandez
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59 views2 pages

Essay Time M7 ManEco

GDP data provides useful information for comparing social well-being and economic performance across time periods and nations, but it also has important limitations. It can track changes in national output and income, but excludes key factors like environmental quality, health, education, and income inequality that also influence well-being. Directly comparing GDP values between nations or time periods with different currencies or populations can also provide misleading results. A more comprehensive analysis is needed to fully understand social and economic progress.

Uploaded by

Marie Sheryl Fernandez
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1. Using GDP data to measure the social well-being of a nation.

STRENGTHS

The strengths of using GDP data in measuring the social well-being of a nation are first,
it provides the aggregate value of the products and services produced within the country’s
borders in a specific period of time. Secondly it, provides the value on national expenditure
of the inputs in the total production of products and services of a country. And lastly, it
provides the value of total income received by residents or citizens of the nation. These
level of production, value of national spending and national income are indicators in
measuring the social well-being of a nation. GDP data may show the wealth and the
material things the citizens from different sectors of a nation possess. And also, GDP
growth rate can show the increase and decrease of the national output. So for example,
when firms increase production it will lead to an increase in national output, they will
employ more factor inputs from households and hence will pay them more factor income
which will lead to an increase in national income. Thus, an increase in national output
contributes to a rise in national income which are one of the indicators in measuring the
social well-being of a nation.

WEAKNESSES

To totally measure the social well-being of a nation, certain elements are need to be
considered like the environment, health, education, distribution of income, non-marketed
goods and other non-material things that satisfy and increase the happiness of an
individual. These elements are unfortunately not included or present in GDP which makes it
inaccurate to use when measuring the social well-being of a nation. Although GDP
accounts the expenditure on environmental equipment and projects, healthcare facilities
and educational programs but it excludes the level of environmental cleanliness, health,
and quality of learning. It also excludes activities that are non-market production that
contributes to the quality of life like those produced for private consumption only. Lastly,
the use of GDP data may not show the distribution of income since it only accounts the
value of national income as a whole. Thus, a higher GDP may not always suggest a
higher quality of life because an increase in national income may indicate an increase of
income disparity and higher national output may suggest increase in carbon emissions that
damages the environment and a poor leisure hours for workers which do not correlates to a
sustainable, happier and healthier quality of life of a nation.

2. In making comparisons of one nation to another

STRENGTHS

The strength of using GDP data in comparing different countries is that it’s widely
acceptable in which the formula for the calculation of GDP are used by almost all countries.
Secondly, it is use to rank countries because its data values implies how developed or
underdeveloped a country is and helps identify how different countries have grown
economically overtime. The ranking of the different countries are also used as to what
country should be prioritized for aid payments.

WEAKNESSES

Despite its wide usage, GDP data has its weaknesses if used in comparing different
countries, one of which is the different currencies of these countries. Since a country
measures its GDP using its own currency it would not be accurate to compare one country
to another if there is no common currency. Thus, it is relevant to have a common
denominator when comparing the GDP of one nation to another. Another weakness is the
country’s population, if GDP is used to rank and compare one country from another it may
provide an unfair and misleading value because some countries have more number of
people participating in economic activities while others have less. Thus, it may show a
country with high population to have a high GDP value just because of the vast number of
people who engage in economic activity.

3. In making comparisons of one time period in a given nation's history with another
time period in the same nation's history if there has been a large passage of time
between the periods.

STRENGTHS

The strength of using GDP data in comparing 2 different periods in the same nation’s
history is that it can provide a better figure in assessing long-term economic performance
specifically the real GDP. Real GDP makes it more significant to compare GDP from year
to year and from various years because it shows comparisons of the quantity and value of
goods and services in a country. With this data, economists/policymakers would easily
identify if the national production have expanded or contracted over the years. They can
evaluate the impacts of the efforts they applied like monetary and fiscal policies and make
improvements to maintain status or to arise from downturns.

WEAKNESSES

The weakness of using GDP data in comparing 2 different periods in the same nation’s
history is that it is limited only for measuring national output which only provides
information of the economic growth from different periods. And yet, health and life
expectancy, environmental condition, non-marketed good, education literacy, leisure time,
income distribution, political freedom and social justice are omitted from GDP which are
very relevant in assessing the economic development of the country over the years.

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