Comparing per capita real gdp over a short period of

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Comparing per capita real GDP over a short period of time say 10 years are quite valid, but over an extended period of time say 20, 30, or 40 yr. – it is not valid. Over long period of time, not only do different goods and services go into GDP, but the quality of those goods and services changes as well INTERNATIONAL COMPARISON OF PCR (GDP) The per capita real GDP of the U.S is perhaps 100 times the size of India’s. Does the U.S produce100 times as much per capital? Probably not. The typical Indian, a farmer living in a rural village, is not subject to the psychological stresses, commuting problems, pollution, or crime that the average American is. The average Indian family produces most of its own food, clothing and shelter items that are not counted in GDP. We are seriously underestimating India’s real GDP. Comparison: About 20 years ago, U.S was clearly #1. Today, the per capita real GDP of Switzerland, Sweden and Denmark may be a bit higher. Japan, Netherlands, Germany and Norway may be at around the same level.
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- 7 - SHORTCOMINGS OF GDP AS A MEASURE OF SOCIETY’S WELL-BEING 1) Household production GDP does not take into account of H.H production 2) Underground economy On country roads, in flea markets. Dentists checks or cash: any discount for cash. 3) Illegal Production Dope, prostitution and gambling Production is any good or service that people are willing to pay for. Treatment of Leisure Time GDP does not take into account leisure time: the decline of the average work Human Cost and Benefits Psychic cost a psychic income What goes into GDP Social costs etc. The GDP is just a # and no one # can possibly provide us with all the information we need. James Tobin and William Nordhaus GDP - Regrettable necessities (private security) - Economic bad (social cost to society) + Household production + Underground economy + Illegal production
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