which is better? Gross Domestic Product or Human Development Index?:
Gross Domestic Product
the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living; although this can be problematic because GDP per capita is not a measure of personal income. See Standard of living and GDP.
Advantage:
- Shows how much you have grown capered to the nations around you.
- Helps to estimate the total no. of production resource at national level.
- Helps to calculate national income.
- Utilization & availability of resources are measured by GDP.
Disadvantages:
- It does not show the inflation.
- Can not compare a country from year to year.
- Fails in terms of measuring quality.
Human Development Index
composite statistic used to rank countries by level of "human development" and distinguish "very high human development", "high human development", "medium human development", and "low human development" countries. comparative measure of life expectancy, literacy, education and standards of living for countries worldwide. It is a standard means of measuring well-being, especially child welfare. It is used to distinguish whether the country is a developed, a developing or an under-developed country, and also to measure the impact of economic policies on quality of life. There are also HDI for states, cities, villages, etc. by local organizations or companies.
Advantages:
- Good composite indicator - gives us more of an idea than just GDP or life expectancy.
- Easy to rank countries as it is a uniform measure.
- Easy access to the status of a country.
- Political competitiveness.
- Easy and cheap to collect data.
- Sign of welfare in the future because improving health and education are both supply-side policies which can indicate the long-term patterns of AS curve.
- The success of government policy can also be seen.
- As it is one value it allows statistical analysis and other modeling to be done and is altogether a practical measure.
Disadvantage;
- Not accurate as data is unreliable.
- It doesn't measure politics or gender equality.
- Does not take into account poverty or other measures of deprivation.
- PPP values change very quickly and are likely to be inaccurate or misleading.
- Still very little sense of income distribution with this measure.
- Quality of life does not seem to be that closely linked with it and we don’t get to taken into account things like war or political oppression..
- Human development altogether is difficult to measure and is based on normative economics. Other measures such as access to internet might be more important.
- Changes over time - ceteris paribus.
Now you decide, which matters most?
