Week 10: Is the traditional measure of Gross Domestic Product a Satisfactory Measure of Economic progress? What are the problems with the measure?
There have been numerous criticisms of the shortcomings of GDP as both an accurate and meaningful measure of economic growth.
To understand the context, take a look at the origins of GDP as an economic indicator:
1.Origins of Gross Domestic Product as a measure of Economic Progress and growth
Gross Domestic Product became institutionalized during the Great Depression as an attempt to measure the U.S. economy’s overall progress in the output of goods and services.
Comprehensive measures of national income and output did not exist during the Depression; thus, efforts to obtain such a measure of how well the economy was performing
The Department of Commerce – the agency that conducts GDP measurement to this day – summoned economist Simon Kuznets to develop the nation’s first national economic accounts. The first measure developed was a National Income measure.