"GDP IS A GOOD MEASURE OF ECONOMIC WELL BEING BECAUSE PEOPLE PREFER HIGHER TO LOWER INCOMES." SO, GDP TELLS US THE INCOME OF PEOPLE?BASED ON THIS STATEMENT BY GREGORY MANKIW, IS HE SAYING THAT GDP...

"GDP IS A GOOD MEASURE OF ECONOMIC WELL BEING BECAUSE PEOPLE PREFER HIGHER TO LOWER INCOMES." SO, GDP TELLS US THE INCOME OF PEOPLE?

BASED ON THIS STATEMENT BY GREGORY MANKIW, IS HE SAYING THAT GDP TELLS US THE INCOME THAT PEOPLE EARN?

Expert Answers
pohnpei397 eNotes educator| Certified Educator

Well, not exactly.

GDP only tells us how much is produced in the country as a whole each year.  It does not tell us how much money the people make.

A measure that comes closer to telling us how much people make is GDP per capita, which measures the amount of GDP when it is divided between all the people in a country.  But of course the money made by people in a country is not split up evenly, so even GDP per capita does not tell us what people actually earn -- just an average.

Mankiw is kind of generalizing.  (And he is speaking sort of in a non-technical way when he makes that statement.)  In general, a country with higher GDP has richer people.  In general, that makes people happier because they prefer to have more money rather than less.  Therefore, on average he is saying, people in a country with high GDP are going to be happier/better off than people in a country with low GDP.  Therefore, GDP is a good measure of well being.