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Increase in Economic Growth does not Necessarily Lead to an Increase in Human Well-Being - Essay Example

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A critical evaluation on the claim that an increase in economic growth does not lead to an increase in human well-being Economic growth as a measure of the economic activity has been in existence since the times of ‘wealth of the nations’ by Adam Smith…
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Increase in Economic Growth does not Necessarily Lead to an Increase in Human Well-Being
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Extract of sample "Increase in Economic Growth does not Necessarily Lead to an Increase in Human Well-Being"

Download file to see previous pages There are many definitions to the term economic growth; however, economists agree that economic growth refers to the growth in goods and services that a country produces over a period of time; this growth is measured in gross domestic product (GDP) (La Grandville, 2011, p536). GDP includes the goods and services that a country produces, that is to mean the personal expenditure of the people in the country added to the government expenditure and the net exports, which is the value of exports minus imports (Contanza, Hart, Posner and Talberth, 2009, 3). There have been various concerns by economists of how well GDP measures the well-being of individuals in a country with most of them arguing for differentiation between economic growth and economic well-being. This paper will therefore analyse critically the claim that an increase in levels of economic growth does not necessarily translate to increase in the well-being of individuals. The idea of well being of an individual can be either objective or subjective. In the objective well-being, individuals use material goods that are measurable such as buying a new house or car among other material gains. However, economic growth is not usually associated with improved material well being because some of the factors that cause the economic growth also cause negative impacts in the society such as exploitation, environmental degradation or unequal spread of the wealth. GDP as a measure of well being of individuals’ measure the value of intermediate goods, which are not enjoyed by people rather they are used to produce other goods and services. In addition, the exclusion of military expenditure from GDP since there is no measurable output undermines the improvement in the quality of life that people enjoy due to military operations to secure the boarders of a country hence reducing criminal activities (D’acci, 2011, 49). The subjective well being of is the state of happiness that is usually brought about by the enjoyment of the material wealth. In most of the instances, the subjective well-being, which is the psychological utility of the good that an individual has, is used to measure the variations in the objective well being of the individual. Research has found out that in some instances even with improves material wealth of a country, the happiness levels do not improve , however this claim has been refuted as in most instances the wealthier a country becomes the happier the residents are as wealth leads to increased levels of expressed happiness (Oswald ,1997, 1815). In addition, the levels of happiness that an increase in material wealth brings are usually attached to the social expectations and aspirations. Therefore even if economic growth increased the material wealth of an individual, the economic standards benchmark will rise, the individual will therefore remain at the same position or be worse off relative to the new economic standards and expectations which in return does not making him any happier. In addition, the increase in employment that is brought about by economic growth does not necessarily lead to increased well being of an individual (Kenny, 1999, 6). Research conducted by the international labour organisation has showed that over 40% of workers are classified as poor, this happens when the employment increases without accompanying increase in productivity of each worker, it has been confirmed in East Asian countries such as Vietnam where increased levels of productivity among employees have led to reduction in poverty levels in the country. The idea that economic growth d ...Download file to see next pagesRead More
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