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GDP per Capita vs True Welfare

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Economic growth, as measured by increases in real GDP per capita, is a goal for most countries. This is often interpreted as an increase in economic welfare for citizens. How would you evaluate this assertion? If there are reasons to dispute it, why is it a nearly universally recognized goal? Are there better methods for measuring economic welfare? How would you measure it?

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Solution Summary

Why GDP per capita is the gold standard for measuring economic welfare, and whether it is a value method of measuring economic welfare for citizens.

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GDP can be used as a rough indicator of national progress in most of the world. GDP is often divided by the population of a country to obtain GDP per capita, which should correlate roughly to average wealth of the population. In general, it is true that as GDP per capita increases, the standard of living does as well. For example, GDP per capita in the US is $48,100, while in Kenya, it is $1700 (see https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html). This vast difference is attributable to ...

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