GDP as a measure of welfare - Research Paper Example

GDP as a measure of welfare The measures of standard of living have been entirely drawn upon Gross Domestic Product (GDP) by most of the economies in the entire world. Nevertheless, it is not always the all round determiner of the standard of living in many of the countries around the globe. It is not only factors like the overall country’s income in terms of taxation or foreign exchange income that determines the measures of living standard of a country but minor elements of education, life expectancy and income equality can be used to categorize the living standard .

High-income countries like Russia and Kuwait has not been depending on the GDP of their economy to measure the standards of their peoples’ living. Russia for instance has been having an education system that determines its future economic development as it specializes in providing learners with basics in various fields like technology and trade. This therefore shows particularly that GDP can be the only factor to be used to gauge the performance of an economy in a country. Education at large is an expenditure to the economy therefore it should be counted during the measuring of Russsia’s standard of living.

The life expectancy of both Russia and Kuwait is high and it is depends heavily on the economy due to expenses used in these two states to ensure that the life expectancy is very high as it looks at spending in good medical facilities and the higher the life expectancy the higher the future economic growth. This two states have tried to encourage for an equal balance in terms of income among the individuals. They do this by setting standards by a certain level to suit every individual there during the calculation of the living standards of the country and the measures included.

Hence the GDP per capita have a close relationship with these other alternative measures in determining the living standards. These alternative factors should at all cost be included in the measure of living standards across these two nations economically..COUNTRYINCOME CATEGORYGDP PER CAPITALIFE EXPECTANCYLITERACYTAXATION RATERUSSIAHIGH INCOME14,03770.46%99.7%50%KUWAITHIGH INCOME56,37474.36%93.9%12.1%SOUTHERN SUDANLOW INCOME94354.51%27%28%AFGHANISTANLOW INCOME68760.51%28%36.3%IRAQLOWER MIDDLE INCOME6,62569.24%78.5%27.

8%JAMAICAUPPER MIDDLE INCOME5,44973.38%87%44.3%The above table representing the economic data of the six mentioned above countries.Another important measure of the living standard is the taxation rate in the economy of the involved countries. This simply adds to the revenue income of a nation at total budget which qualifies it to be used as a determinant in measuring the standard of living since it entails income of the authority government which is the overall income to the country. The large the tax rate the higher the income revenue to the government.

The six countries as shown with their respective tax rate.Kuwait belongs to the same category as Russia because all of theare of high income. Kuwait has a very lower taxation rate as compared to Russia but it has a high GDP per capita than Russia as shown in the economic data table above. All in all GDP is not a real reasonable measure of standard of living since it does not contain all the elements of economic composition from varying macro to micro factors. ReferencesThe World Bank: Classification of Countries. (2014).International Monetary Fund: Classification of Countries. (2013).