Gross Domestic Product - Article Example

Action Report 2 The big issue, according to Stiglitz concerns whether gross domestic product (GDP) offers a superior measure of living standards. In a number of cases, GDP statistics appear to propose that the financial system is doing far much better compared to most citizens' own thoughts (Stiglitz 1). In addition, the spotlight on GDP leads to conflicts: leaders (political) are urged to maximize it, but citizens, on the other hand, also require that attention be given to improving security, reducing water, air, as well as noise pollution, and the likes – all of which may decrease GDP growth.

The same issues in making comparisons in due course related to comparisons across nations (Stiglitz 1). The US uses more money on health care compared to any other nation but gets much poorer results. Part of the dissimilarity between GDP per capita in Europe and the US might hence be due to the way people measure things. Another significant transformation in most countries is a rise in inequality (Stiglitz 1). This means that there is a rising disparity between the median income (that of the "normal" earner, whose salary lies falls in the middle of the income distribution table) and average income.

If a few people working in the bank get richer, average or mean income can increase, even as most peoples’ incomes are decreasing (Stiglitz 1). Therefore, GDP per capita statistics might not echo what is occurring to most citizens. Any proper measure of how well countries are performing should take into account sustainability, as well (Stiglitz 1). Just as a company requires measuring the reduction of its capital, so do national accounts require reflecting the drop in natural resources, as well as the degradation of the environment.