Is Gross Domestic Product per Person a Useful Measure of Economic Well-being?
Gross Domestic Product: Gross Domestic Product is the entire monetary value of all finished goods and services that are produced in a country within a specific period of time, usually a period of 12 months1. For the purpose of calculation, the spending on both private and public levels is considered. Also, Investments, Exports and Imports are taken into account to compute the Gross Domestic Product. The Gross domestic product serves as a comprehensive measure of the economic well being of a country.
Gross Domestic Product per person: Gross domestic product per person assesses the value of goods produced per person in the country. Such assessment is arrived at by dividing the gross domestic product with the total population of the country. While gross domestic product gives the idea of the standard of living of the country the gross domestic product per person estimates the worth available at the disposal of each individual in the country.
Gross domestic product as such is considered to be a very significant economic indicator; however, the GDP per person gives a deeper insight into the economic health of the country by measuring the economic stability at an individual level. The gross domestic product per head is generally used as an indicator of economic well being on a comparative note.
Since, the gross domestic product per person demonstrates the economic vigor at a micro level; it is very helpful in cross-section studies to determine the demand for consumer goods. Nonetheless, when it comes to assessing the economic health of a nation at a broader perspective, gross domestic product very well serves the purpose. Also, the comparison between countries becomes uncomplicated when gross domestic product is used as a yardstick for an evaluation on a global platform.
References
. Heilbroner, Robert & Lester Thurow. (1994) Economics Explained. New York: Simon and Schuster Publishing.
2. Beinhocker, Eric. (2007). The Origin of Wealth. USA: Random House.
3. Kroon, G.E. (2007). Macroeconomics The Easy Way. New York: Barron’s Educational Series Inc.
