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Do you agree with the criticisms of Gross National Product/Gross Domestic Product? Why...

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sj83 | (Level 1) Valedictorian

Posted August 19, 2013 at 1:58 AM via web

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Do you agree with the criticisms of Gross National Product/Gross Domestic Product? Why or why not?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted August 19, 2013 at 2:27 AM (Answer #1)

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I do tend to agree with the criticisms of gross national product (GNP) and gross domestic product (GDP).  This does not mean, however, that I think that these measures should no longer be used.  Instead, it means that we should take them to some degree with a grain of salt.

It is clear that the criticisms of GNP and GDP are true.  There is no disputing that these measures fail to take into account the damage that economic growth can do to the environment.  There is no disputing that these measures fail to take into account things like income inequality.  There is no disputing that they do not count work that is done for no pay.

However, this does not mean that these measures should not be used.  It is hard to know how to make a statistic that would set the value of environmental degradation.  It is hard to see how one statistic could capture both the amount of economic activity in an economy (as GDP does) and the amount of inequality (like GINI indexes do).  It is hard to know how we would value work done at home.  Therefore, while GDP has its flaws, it is hard to think of a better statistic.  We should be aware of its problems but should not discard it.

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