Abstract
Probably few topics in applied economics are given more attention in the media and in public debate than the growth of ‘national income’, or two related concepts, namely gross national product (GNP) and gross domestic product (GDP). All three concepts are approximate measures of how much income a country produces each year. Most people will have seen or heard claims about which country has the highest GDP per head, or the fastest growth rate of GDP and so on. At the same time there has been growing criticism of the national income concept as a measure of ‘welfare’. In the last five decades or so all the advanced countries of the world experienced historically unprecedented rates of economic growth, so that per capita real incomes soon reached levels that were way above those of the prewar period.
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Notes
- 1.
GDP measures the ‘product’ (i.e. the unduplicated output) in the territory of the designated country, and GNP measures the product accruing to the nationals of that country, the difference being that GNP includes net income from abroad. For many years now the focus has been on GDP, and GNP has now been dropped from official British statistics and replaced by the term ‘gross national income’ (GNI). ‘National income’, which is GNI less depreciation of capital assets, is also a common unit of reference, since it is closer to what most people will feel is their actual income (before taxes and benefits). For a full description of the relationship between these and other closely related concepts see the Office of National Statistics, 2008.
- 2.
Reported in the Financial Times, 2nd October 2006:6.
- 3.
See Blanchflower and Oswald, 2004.
- 4.
Pigou, A.C., 1932 edn:12.
- 5.
Australian Government Treasury, 1973.
- 6.
This is the Report by the Commission on the Measurement of Economic Performance and Social Progress, Paris, 2009:11. This commission, which was set up by the then President of France, comprised Joseph Stiglitz [chair], Amartya Sen and Jean-Paul Fitoussi.
- 7.
See a discussion of these problems in Beckerman, 1980.
- 8.
Nordhaus and Tobin, 1972. This argument implies that, even if it is believed that there is a risk of war, people would be worse off without the defence expenditures. Apart from hard-line pacifists, most people would dispute this.
- 9.
- 10.
Stiglitz et al. 2009.
- 11.
Ibid :12.
- 12.
Ibid :15.
- 13.
See a list of ten basic capabilities, in Nussbaum, 2000.
- 14.
- 15.
- 16.
Sen, 1984:319.
- 17.
This is produced by the New Economics Foundation.
- 18.
Stiglitz, J., Sen, A., and Fitoussi, J.-P., 2009:para. 21.
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Beckerman, W. (2017). GDP and Friends. In: Economics as Applied Ethics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-50319-6_11
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