GDP as a Good Indicator of the Economic Health - Essay Example

It is imperative to know what the GDP is before commenting on whether if it is a true indicator of quality of life or not. The GDP of any country isthe money values worth of all the goods and services produced within the economy in a given fiscal year (Sloman J 2009). This unfortunately is not a true representation of the quality of life that is prevalent within an economy, the GDP per capita which is the money values worth of all goods and services produced within the economy divided by the total population of the country to some extent is a representation of the quality of life but even that does not reveal a holistic and complete picture because it does not show how many people receive that amount of money and whether that increases the quality of life or not (Wessels W.2006). There are other means which can be used to gauge the quality of life that is prevalent in the economy. The way income is distributed in the economy is a measure that can be used to gauge the quality of life, because that shows how many people receive what percentage of the income that is being generated within the economy and how many people receive an income that is below the average. Using such measures can also be used to calculate the population that lives below the poverty line, such measures are extremely helpful and useful when it comes to designing policies and policy frameworks at the macroeconomic level of the economy (Dasgupta P. 2007). Demographic studies have also shown that quality of life is judged more accurately by average life expectancy, ratio of hospitals to population, ratio of doctors available per patient, age distribution, income distribution, average household and gender ratios. These factors play an important role in any economy because earning money is not the only objective, the money earned should be translated into something which really has meaning and/or which could bring happiness to individuals for instance if the money earned could not be translated into good medical health care services then it is of no use to the individual, money earned should have the potential to be translated into goods and services of the highest quality. The average life expectancy in Britain is pretty high as compared to the rest of the world, this is a positive indicator because this makes Britain an ideal place to be desired to live in. the health sector the quality that Britain is providing as compared to the world is extremely high and pretty high even when compared to other countries in Europe, this shows that people in Britain have a high quality of life when compared to the rest of the world (Duffy J. 1993). Although GDP is a widely used tool when assessing the economic health of any country because it is a true representation of the country when it comes to economic activity that is being carried out and how well the economy is doing but it is not a true representation of the welfare of the general masses or level of satisfaction that the entire population has, this is so because human nature needs have to be satisfied through goods and services and not through earning money only (Duffy J. 1993). Human needs can only be met in a satisfactory way if the quality of the goods and services provided is extremely high, in third world countries such as India and Pakistan, the problem is that people do have the money but the quality of life is very low due to problems that the economy is facing. For example in Pakistan, even if one could afford to pay for the electricity bills one is not able to get it because there is an overall shortage of electricity, this lowers the quality of life because of power shortages and a constant load-shedding that needs to be carried out to distribute power. Law and order plays a vital role in \quality of life because people need justice and a society needs to law and order to survive, if there is no law and order people would find it very difficult to survive within the economy, and no amount of money can ensure security because it is the responsibility of the state to provide security to the people that live within the state. Corruption and bad governance are issues that plague societies and have lead to the downfall of many, corruption leads to uneven distribution of goods and services within society, it is important that every society has systems to curb this disease because it can severely decrease the quality of life that the masses enjoy. Political stability and a strong political system are also contributors to the quality of life within any society because political stability leads to economic welfare through the continuation of policies of governments (Gwartney J. 2008). There are other economic indicators as well that are used for judging the health of any economy such as inflation, inflation is the increase in general price level in the economy if inflation is high it means that the purchasing power of most people in the economy is decreasing rapidly and the quality of life is decreasing (Dasgupta P. 2007). The quarterly figures for GDP of the UK show a constant increase except for the Q3 and Q4, this only represents the economic health of the country and is not a true representation of the wellness or the happiness of the population of the UK. CONCLUSION GDP is a good indicator of the economic health of any country but it is not a true representation of the wellness of the population, but there are other measures that are a very true representation of the happiness of the population within the country. These measures have been used for many a years now such as, population distribution, average age and other such measures. The UK quarterly figures for the GDP are listed below and show a decrease in most quarters except for Q3 and Q4 but this is higher than a lot of countries in the world, which shows the economic health is pretty good. The fact remains that if economic health of a country is good then it would be able to provide a higher quality of life to its people but economic indicators are not the only way or the most efficient way of judging the quality of life of people within a society, hence other measures which have been quoted above can and should be used to gauge the social welfare of the society at large. BIBLIOGRAPHY McConnell, C; Brue, S. (2006). Economics. McGraw Hill Irwin. Wessels, W. (2006). Economics. Barron’s Educaional Series. Baumol, W; Blinder, A. (2008). Economics: Principles and Policy. Cengage Learning. Gwartney, J; Stroup, R; Sobel, R; MacPherson, D. (2008). Economics: Private and Public Choice. Cengage Learning. Dasgupta, P. (2007). Economics: A very short introduction. Oxford University Press. McEachern, W. (2008). Economics: A Contemporary Introduction. Cengage Learning. Duffy, J. (1993). Economics. John Wiley & Sons. Heilbroner, R; Thurow, L. (1998). Economics explained: everything you need to know about how the economy works and where it's going. Simon & Schuster. Mankiw, N. (2008). Principles of Economics. Cengage Learning. Sloman, J. (2009) Economics 7th Edition . Pearson Education Read More