Magnus Itland (itlandm) wrote,
Magnus Itland

Economics - GDP per capita

The Economist has an interesting article about the difference between GDP (the usual measure of a nation's economy) and GDP per head. For instance in Japan, where the population is now shrinking, zero GDP growth would still leave each person better off.
(Let me add that GDP also fails to measure improvements in quality and features - a $1000 computer in 2008 is considered equivalent to a $1000 computer in 1998, which is plain rididulous; but this is largely independent of nationality, at least in the developed world.)
Conversely, the USA has a population growth of roughly 1% a year, so an economic growth of 0.6% as in 4th quarter 2007 means the average person is marginally worse off.
(Again, there is some difference among nations regarding how typical the "average" is. In parts of Europe, there are almost only average incomes, while in the USA and Latin America there is a wide spread, so the average does not tell quite as much about what the man and woman in the street experiences.)

The magazine readily concedes that for military purposes, having more people may be just as useful as having each person being richer. But I would surmise that when people think as voters rather than soldiers, they might be very interested indeed in whether they are left with more money each, or less.
Tags: economy
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