GDP or Gross Domestic Product is defined as the total market value of all final good and service produced in a given year. It is a simple formula that adds together personal consumption expenditures, gross private domestic investment, government purchases, and Net Exports, otherwise expressed as GDP= C+ Ig+G+Xn. The Social Security number was never supposed to be a number for identification. Just the same, GDP is being used for a purpose other than what it was designed for. It was not to be an indicator of economic welfare but that is how it is used today, not only in the US but in countries around the globe. At first glance it may seem like a good way to sum up the economic welfare of a country, but upon digging a little deeper some problems are uncovered.
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While using national data to identify trends, the ISEW method uses a more local approach. It encourages data collection at a local level by utilizing those organizations that are closest to the data. For example a local school board could supply the record necessary to track graduation rates in a particular community. A further example is given of the traditional method of measuring versus the sustainable approach. Traditionally SAT scores and other standardized tests are used to see if the proper curriculum is being taught. The sustainable approach would actually dig a little deeper to determine if the number of students trained for jobs is equal to the jobs available in the local economy. The outcome would be the ability not only to recognize a deficiency, but a chance to correct any gaps by tailoring job skills and training to meet the needs of the local economy. This method links together, society, environment and economy making each one interdependent on the other.
In conclusion, I would urge you to challenge the use of GDP as an indicator of economic welfare. Although some measure is needed to aid in forming economic policy, GDP may not be the correct answer. Even as the US continues to see economic growth, we are reminded of the old adage, "Money isn't
While using national data to identify trends, the ISEW method uses a more local approach. It encourages data collection at a local level by utilizing those organizations that are closest to the data. For example a local school board could supply the record necessary to track graduation rates in a particular community. A further example is given of the traditional method of measuring versus the sustainable approach. Traditionally SAT scores and other standardized tests are used to see if the proper curriculum is being taught. The sustainable approach would actually dig a little deeper to determine if the number of students trained for jobs is equal to the jobs available in the local economy. The outcome would be the ability not only to recognize a deficiency, but a chance to correct any gaps by tailoring job skills and training to meet the needs of the local economy. This method links together, society, environment and economy making each one interdependent on the other.
In conclusion, I would urge you to challenge the use of GDP as an indicator of economic welfare. Although some measure is needed to aid in forming economic policy, GDP may not be the correct answer. Even as the US continues to see economic growth, we are reminded of the old adage, "Money isn't