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Evaluating Our Economy When economists study the markets of the United States they must use certain criteria to judge their performance They use those principles to determine if the economy is stable slumping or if its growing One tool economist use is the Gross Domestic Product This is a measurement of money spent on goods and services purchased by households businesses and governments Some look at a relatively new aspect of measuring economic prosperity called the Genuine Progress Indicator The GPI takes from the GDP the financial transactions that are relevant to well being It then adjusts them for aspects of the economy that the GDP ignoresCobb This paper will discuss what indicator economists should use and why and alternatives available to the ones in use right now One measure economists use to measure economic growth is the Gross Domestic Product Now there are many problems with this being an economic indicator Originally designed as a planning tool to guide the massive production effort for World War II the GDP was never intended to be a yardstick of economic progress yet it has assumed totemic stature as the ultimate measure of economic successCobb The main problem facing the GDP is that it fails to distinguish between monetary transactions that genuinely add to well-being and those that diminish it try to make up for status quo or make up for degraded conditionsCobb The GDP also fails to include environmental factors such as resource depletion and pollution on the environment The only thing GDP is based on is whether money is exchanged this is why it is relatively useless in todays society The last problem with GDP is that it represents the average person rather than the typicalGoodstein But for a measure of sustainability we are interested in the welfare of the median person If the income distribution in a country is getting more equal median welfare will rise faster than if the typical
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