Unit 2, AOS1 Limitations and Alternative Measures Flashcards
Limitations of real GDP/ per capita
- GDP excludes most non marketed production (housework ect.)
- GDP uses inaccurate ‘guestimations’ of some types of production
- GDP fails to take into account -ve externalities that lower non-material LS
- GDP x measure changes in quality of g/s from one quarter to next
- GDP fails to take into acount the way g/s and incomes are distributed and shared.
MAP (Measures of Australia’s Progress)
-A suite, or collection, of measures published periodically by ABS.
- 4 main categories of mesaures used by ABS to compile this impressive publication: society, the economy, governance, the environment.
GPI (Genuine Progress indicator)
Uses GDP data -> makes -ve and +ve adjustments to values, to better reflect the good or bad effects of some types of economic activity on society’s material and n-material wellbeing. Includes:
-Estimation of the value of unpaid community work, home duties like housework and parenting duties, and making a deduction for income inequality and reliance on debt to finance our consumption and way of life. (ignored by GDP).
-Making deductions for environmental destruction or some externalities, inc. the loss of leisure time to work, family breakups and rising crime rates.
HDI (Human Development Index)
An index created by combining a range of economic and social considerations. Where 1= highest and 0= Lowest.
Indicator of MLS in the HDI:
-GDP per capita, however, this figure is adjusted to remove variations in the actual purchasing power of money in diff countries, as well as adjusted downwards for inequality in the distribution of g/s.
Indicators of social or N-MLS in the HDI:
-LE
-Education standards
GNH (Gross National Happiness)
A composite index made up of several indicators including:
-GDP per capita
-Social support
-Health and LE
-Freedom to make life’s choices
-Generosity
-Trust
10= best, 0= worst.
