![]() For example, if a country decides to cut down all its forests, it will dramatically increase its timber exports, thus increasing its GDP. Social, environmental and economic progress does not always go hand in hand with an increase in GDP. Increasing GDP today, depleting resources for tomorrow ![]() Starting in 2014 the trend is positive for both indicators, but it can be noted that growth is at a slower pace for the part of the Gross National Product that households can benefit from.įigure 1: GDP versus gross disposable income of households, EU-27, in volume/real terms, 2010 or 2008=100, 2005-2019 One of the reasons for this apparent inconsistency is that social transfers (social security benefits, reimbursements etc.) seem to have absorbed and softened the effect of the crisis (at least during the first few years). On the contrary, households’ adjusted gross disposable income for the same period (2007-2009) has slightly increased, and started to decrease slowly the next year, reaching the lowest point in the period analysed in 2012-2013. The decrease is however not reflected in the part of national accounts income that is generated by the household sector, during the first years of the crisis. This sharp decrease reflects the beginning of the financial crisis. As shown in Figure 1, for the period 2005–2018, GDP (in real terms) in the EU-27 reached its peak in 2007- 2008 and plunged to a record low a year later, in 2009. In many cases, household incomes may develop differently from real GDP and therefore provide a different picture of this aspect of citizens’ well-being. ![]() Stiglitz, Sen and Fitoussi argue that the income of a country’s citizens is ‘clearly more relevant for measuring the well-being of citizens’ than domestic production. Fitoussi Report on Measurement of Economic Performance and Social Progresscitizens’ material living standards are better monitored by using measures of household income and consumption, and ideally joint measures of income, consumption and wealth at individual level should be used. While GDP is very useful for measuring market production and providing an indicative snapshot of an economy at a given time, it does not provide a comprehensive picture of how well-off the citizens of a society are. Other measures of income reflect better households' situations The following are a number of reasons why GDP is not sufficient for this purpose, and therefore needs to be complemented by other indicators. However, although it was not intended as an indicator of social progress, it has been considered to be closely linked to the well-being of citizens. ![]() GDP is very useful for measuring market production (expressed in money units). It includes all final goods and services an economy produces and provides a snapshot of its performance. ![]() Gross Domestic Product (GDP), one of these aggregates, is the most common measure of the economic activity of a region or a country at a given time many decision and policy makers use it as the standard benchmark, often basing their decisions or recommendations on it. This is because they allow direct comparisons to be made easily. National accounts aggregates have become an important indicator of the economic performance and living standards of our societies. Measuring quality of life for different populations and countries in a comparable manner is a complex task, and a scoreboard of indicators covering a number of relevant dimensions is needed for this purpose. The latter depends significantly on citizens’ priorities and needs. command of material resources, health, work status, living conditions and many others) and the subjective perception one has of them. It encompasses both objective factors (e.g. Quality of life is a broad concept that encompasses a number of different dimensions (by which we understand the elements or factors making up a complete entity, that can be measured through a set of sub dimensions with an associated number of indicators for each). ![]()
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