Why GDP sucks | Gross Domestic Product, Human Development Index, Measuring the economy

GDP. It sucks. I made a video on it. It also sucks. So here’s a redo. But what is it? Well, GDP or Gross Domestic Product measures the total output of an economy at a given time period. It was created by Simon Kuznets back in 1934 and even he saw its limitations back in the day. To calculate GDP, you could use the Production method by subtracting the cost of intermediate goods or the income approach which excludes sales taxes, depreciation, and foreign income. But for this video, we’ll keep it simple by using the Expenditure method. This is the sum of consumption, private sector investment, government spending and exports within the economy but takes away imports. Now the first limitation of GDP is that it can’t tell the difference between spending that is beneficial to society and spending that harms it instead.

Sources:
Gini Coefficient World Population Review:
https://worldpopulationreview.com/country-rankings/gini-coefficient-by-country
GDP World rankings (Investopedia):
https://www.investopedia.com/insights/worlds-top-economies/
Human Development Index Country Rankings World Population Review:
https://worldpopulationreview.com/country-rankings/hdi-by-country
Human Development Index United Nations:
http://hdr.undp.org/en/content/human-development-index-hdi

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#HDI
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