Week5_GDP - NATIONAL INCOME ACCOUNTING A THOUGHT EXERCISE...

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NATIONAL INCOME ACCOUNTING
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A THOUGHT EXERCISE Suppose you would be born again at random to parents of a country. You don’t know anything about your prospective parents. However, you can choose the country you want to live in according to only a couple of characteristics. What characteristics would you want to know before making your choice? Which country would you choose? Most people would like information on the material standard of living (GDP or any other measure of income) and on health (Life expectancy, infant mortality etc.). Other choices are political and religious freedom, social and economic inequality, and climate.
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STANDARD OF LIVING: ISSUES There are three issues in defining the standard of living or quality of life: 1. Conceptual Issues : creating a list of essential variables that are directly related to your level of welfare. 2. Implementation and Computational Issues : quantifying the variables, estimating and computing the measures. 3. Weighting : determining the relative importance of each measure of variable.
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STANDARD OF LIVING: CATEGORIES Material Measures: (GDP, GNI, Personal Income…) Health Measures: (Life expectancy, Infant mortality, Average Height, Body-Mass Index, Nutrition, Calorie Intake…) Institutional Measures: (Religious and Political Freedom, Social and Economic Mobility, Corruption…) Distributional Measures: (Income Distribution, Social Inequality, Urban-to-Rural Population…) Physical Measures: (Climate, Pollution…) Educational Measures: (Literacy, Enrollment Rates…)
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MATERIAL STANDARDS: GDP GDP [ and its derivatives such as GNP, GNI, Personal Income etc] is the most commonly used measure of welfare.
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This note was uploaded on 10/20/2011 for the course ECO 202 taught by Professor Normmiller during the Fall '08 term at Miami University.

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Week5_GDP - NATIONAL INCOME ACCOUNTING A THOUGHT EXERCISE...

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