National income and welfare

Gross National Product (GNP) per person is often used as a measure of a person's welfare. There are issues with using this metric.

GNP generally don't include unpaid economic activities. A paid parents income contributes to GNP, but an unpaid parent's time spent caring for children doesn't.

GNP is only a monetary measurement so if you take another job with a profitable company, you will increase the GNP but your quality of life will suffer. The point is that GNP does not measure  an important factor in the United States and that is quality of life of the people.

GNP is the mean wealth rather than median wealth. Let me give an example where GPN doesn't reflect reality. Lets assume there is a small country with 10 people. 5 of these people make $200,000 and 5 of these people make $20,000. If this countries GPN is $1,100,000, then the GNP per person is $110,000 which doesn't measure the correct well being of anyone in the country.Back

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