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Tugas 2 Bhs Inggris Niaga
Tugas 2 Bhs Inggris Niaga
and services. Thus, GDP per person tells us the income and expenditure of the average person in
the economy. Because most people would prefer to receive higher income and enjoy higher
expenditure, GDP per person seems a natural measure of the economic well-being of the average
individual.
Yet some people dispute the validity of GDP as a measure of well-being. When Senator Robert
Kennedy was running for president in 1968, he gave a moving critique of such economic
measures:
[Gross domestic product] does not allow for the health of our children, the quality of their
education, or the joy of their play. It does not include the beauty of our poetry or the strength of
our marriages, the intelligence of our public debate or the integrity of our public officials. It
measures neither our courage, nor our wisdom, nor our devotion to our country. It measures
everything, in short, except that which makes life worthwhile, and it can tell us everything about
Much of what Robert Kennedy said is correct. Why, then, do we care about GDP?
The answer is that a large GDP does in fact help us to lead good lives. GDP does not measure the
health of our children, but nations with larger GDP can afford better healthcare for their children.
GDP does not measure the quality of their education, but nations with larger GDP can afford
better educational systems. GDP does not measure the beauty of our poetry, but nations with
larger GDP can afford to teach more of their citizens to read and enjoy poetry. GDP does not take
account of our intelligence, integrity, courage, wisdom, or devotion to country, but all of these
laudable attributes are easier to foster when people are less concerned about being able to afford
the material necessities of life. In short, GDP does not directly measure those things that make life
worthwhile, but it does measure our ability to obtain many of the inputs into a worthwhile life.
GDP is not, however, a perfect measure of well-being. Some things that contribute to a good life
are left out of GDP. One is leisure. Suppose, for instance, that everyone in the economy suddenly
started working every day of the week, rather than enjoying leisure on weekends. More goods and
services would be produced, and GDP would rise. Yet despite the increase in GDP, we should not
conclude that everyone would be better off. The loss from reduced leisure would offset the gain
Because GDP uses market prices to value goods and services, it excludes the value of almost all
activity that takes place outside markets. In particular, GDP omits the value of goods and services
produced at home. When a chef prepares a delicious meal and sells it at her restaurant, the value
of that meal is part of GDP. But if the chef prepares the same meal for her family, the value she
has added to the raw ingredients is left out of GDP. Similarly, child care provided in day-care
centers is part of GDP, whereas child care by parents at home is not. Volunteer work also
contributes to the well-being of those in society, but GDP does not reflect these contributions.
Another thing that GDP excludes is the quality of the environment. Imagine that the government
eliminated all environmental regulations. Firms could then produce goods and services without
considering the pollution they create, and GDP might rise. Yet well-being would most likely fall.
The deterioration in the quality of air and water would more than offset the gains from greater
production.
GDP also says nothing about the distribution of income. A society in which 100 people have
annual incomes of $50,000 has GDP of $5 million and, not surprisingly, GDP per person of
$50,000. So does a society in which 10 people earn $500,000 and 90 suffer with nothing at all.
Few people would look at those two situations and call them equivalent. GDP per person tells us
what happens to the average person, but behind the average lies a large variety of personal
experiences.
In the end, we can conclude that GDP is a good measure of economic wellbeing for most — but
not all — purposes. It is important to keep in mind what GDP includes and what it leaves out.