Alternative Measures of GDP Research Paper Example | Topics and Well Written Essays - 2000 words

Alternative Measures of GDP - Research Paper Example However, there are few restrictions identified in this system of economic growth measurement which calls for the requirement of alternate methods to present more accurate detail of the economic health of a geographic and political division (Mankiw, 2011). These alternative computations of GDP would be considered in this paper in order to evaluate their impression over the interpretation of GDP. Alternative Measures to GDP Studies have revealed that there are a few inadequacies in the concept of GDP and for the reason of which the need for corrections in the factors included in the GDP along with some substitute computations were identified by various economists. It was stated by Giovannini & Hall (2010) that a collection of indicators needs to be developed which could offer an increased surrounding explanation of the living standards as well as the well-being compared to just a single indicator which is the GDP. For the period of 1970s, a collection of communal gauging methods were u sed with the intention to measure the socio-economic growth by the Organization for Economic Co-operation and Development (OECD). These techniques were considered to be the alternatives of GDP among which few were developed on the foundations of the concept itself (Giovannini & Hall, 2010). Some of the substitute measures also tend to consider the concept of GDP as well as the nationwide accounts to be their groundwork. These have been adapted to appear more accurate than the GDP measure with a few modifications in the traditional method of measuring economic growth. The modifications involve certain additions and deductions of a few indicators concerning the environmental problems, and sustainability problems among others so as to reach to a broader computation of well-being (Commission on the measurement of Economic Performance and Social Progress, 2010; Boarini & Et. Al., 2006). Another alternative is said to be the well-being indicators which does not entail GDP in their computa tions and thus, act as a substitute to the concept. The main substitute amongst the approaches have been learned to be the ‘economics of happiness’ that intends to measure the welfare of the residents in the economy. This method merges practices made by economists as well as psychologists with the intention to determine the degree of happiness in a particular society along with the policy that contributes to it. This particular method goes more from the economists’ perception of happiness which centered on ‘revealed performance’ along with the beliefs that increased unpaid options that were available to an individual and make that individual happier (Nallari & Et. Al., 2011; Schepelmann & Et. Al., 2010). The results from the happiness assessment point out that the unpaid options did matter, similarly as did an individual’s comparative earnings in the society along with the percentile position of those earnings. To be precise, it was found that after an amount of certain per capita earnings gained per annum, the total earnings did not contribute to happiness. Therefore, this method established that total earnings were crucial in describing the individual’s well-being which in turn was essential in gauging the GDP. Another substitute method for GDP so as to measure the economic growth of a country has often been categorized to be the