Is GDP a good measure of growth in living standards

Is GDP a good measure of growth in living standards?There is no definite right or wrong answer to this question. Cons·      GDP alone does not account for the distribution of income in a country – can be very unequal, even if corrected for by GDP/capita·      GDP is a measure of output not consumption – so GDP can stay the same if consumption falls ·      GDP only measures market activities and so misses out on home-produced goods and services ·      GDP includes activities which do not contribute to higher welfare e.g. cleaning up after an environmental disaster – giving a false impression of rising welfare when, if anything, it has declined·      Over short periods of time, GDP correlation with factors of living standards can be very low e.g. health and even positive with negative welfare factors such as environmental degradation and pollution ·      GDP does not tell us about leisure – reinforces the point that there is more to happiness than the consumption of goods and services e.g. weather, family, human rights etc.“Welfare” is a multidimensional concept – ideally we would track many indicators of welfare e.g. health, education levels, environmental quality, inequality, etc. E.g. The “Stiglitz commission” advocates for this “dashboard” approachPros·      Using one measure for special focus has the advantage of making discussion more concrete, and the success or failure of a growth strategy easier to assess·      GDP per capita correlates positively (both over time and across countries) with many of the measures from our dashboard – so if we were to use a single measure to assess welfare then GDP would be a strong candidate ·      GDP’s positive correlation with these welfare indicators is not a coincidence – e.g. providing good education and healthcare for an increasing population requires more and more goods and services. Also increasing material living standards is believed to lead to greater demand for non-material “goods” such as democracy, human rights and a cleaner environment etc. (although the causal effects of GDP on such issues have not been convincingly established yet). If you want a single measure, then I suggest using median household income. ·      All of the arguments in favour of GDP apply to median household income·      In addition, median household income is much more representative of how a typical family’s income is changing – so if we see it increasing we can be more confident that economic growth is more inclusive