Reliability of GDP as a Measure of overall Socio-economic Progress

Introduction

• GDP measures the economic growth of a country, which in general is considered as one of the measures of advancement in the standard of living of the country. 
• Economists believe that GDP is only a quantitative measure of output, and it may not be the case all the time that the standard of living can be linked with economic growth. 
• The advancement in the standard of living can be achieved through equitable distribution of wealth or the dividends of economic growth to the end people directly or indirectly through various programmes and schemes. 
• It is advocated that many countries with higher GNP often score highly on measures of welfare, such as life expectancy. 

Reliability of as a Measure of Socio-economic Progress 

• GDP does not value intangibles like leisure, quality of life, etc. Quality of life is determined by many other things than economic goods.
• Economic inequality is not accounted for in GDP.
• The impact of economic activity on the environment such as harmful pollution, climate change, ecological refugees, etc., are not accounted for or revealed in the GDP.
• GDP does not measure the sustainability of economic growth. A country may achieve a temporarily high GDP by over-exploiting natural resources.
• Gender disparities are not indicated in GDP.
• It does not take into account the nature of goods.
• GDP figures don’t show the human development standards such as life expectancy, adult literacy, education attainment etc.

Alternatives to GDP

• Because of the limitations in the GDP, some economists suggested other measures of welfare and development such as the Human Development Index (HDI), Genuine Progress Index (GPI), Sustainable National Income (SNI), Index of Sustainable Economic Welfare, Gross National Happiness (GNH) and Natural Resource Accounting. 
• The idea of Green GDP is also introduced in order to factor in the environmental consequences on economic growth.