Prosperity Assessment Tools
One of the jobs of economists is to devise ways to measure prosperity. The goal is to better understand what makes societies stable, productive and healthy. Some of the ways economists do this include gross domestic product, gross national happiness, economic well-being and individual living conditions.
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Gross Domestic Product
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Gross domestic product (GDP) measures national productivity in terms of the market value of goods and services. Spending (consumer, investment and government) is added to exports, and the value of imports is subtracted. The significance of GDP is as a measure of quarterly and yearly economic growth. One of the weaknesses of GDP is its failure to distinguish between productive and predatory industries. A prison boom and a school building campaign are given equal weight.
Gross National Happiness
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Gross national happiness is a measure of social well-being that attempts to supplement GDP and correct some of its deficiencies. Its formula subtracts capital consumption, income that goes to foreigners and damaging side effects of industries (such as crime or pollution) from GDP and adds non market activities such as leisure, health, education, environmental cleanliness, public safety and stable family relationships.
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Economic Well-Being
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Economic well-being is an attempt to measure household prosperity at a granular level. Measurements combine percentage of households reporting satisfaction with their housing conditions, favorable neighborhood conditions, satisfaction with schools, community services and possession of durable goods.
Living Conditions
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The standard measurement of living conditions assesses levels of income, poverty, material deprivation, quality of housing, work, education and health. It brings together data samples and survey answers to provide a picture of how individuals and households live that is both methodologically rigorous and attentive to subjective factors, such as emotional satisfaction, trust and optimism.
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References
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