Full Answer Section

• It does not measure non-market goods and services. GDP does not include the value of goods and services that are not sold in markets, such as the value of housework, volunteer work, and the care of children and the elderly.
• It does not measure inequality. GDP does not measure how equally the goods and services produced in an economy are distributed. A country with a high GDP could have a high level of inequality, meaning that some people in the country are very wealthy while others are very poor.
• It does not measure environmental quality. GDP does not measure the environmental costs of economic activity, such as pollution and climate change. A country with a high GDP could be damaging its environment, which could have negative consequences for the well-being of its citizens in the long run.

In conclusion, GDP is a useful measure of economic activity, but it has some limitations as a measure of well-being and welfare. Other measures, such as the Human Development Index, are better at capturing the overall well-being of a population.

Here are some other limitations of GDP as a measure of well-being:

• It does not measure happiness or satisfaction with life. GDP is a measure of economic output, not a measure of people’s happiness or satisfaction with their lives. There is no guarantee that a country with a high GDP will have a high level of happiness or satisfaction with life.
• It does not measure the quality of life. GDP is a measure of the quantity of goods and services produced in an economy, not the quality of those goods and services. A country with a high GDP could have a low quality of life if the goods and services produced are not of high quality.
• It is not a real-time measure of economic activity. GDP is calculated based on data from the past, so it does not reflect the current state of the economy. This can make it difficult to use GDP to track the economy in real time.

Despite its limitations, GDP is still a useful measure of economic activity. It is important to be aware of the limitations of GDP when using it to measure well-being and welfare.