Why is the gross national product an inaccurate indicator of a nation's economic status? How can it be corrected?

Question

What will be an ideal response?

Answer 1

"The GDP is the GNP minus net income from abroad. The economists who invented GNP as a measuring device years ago never took into account the depreciation of natural capital—an omission that recently has received a great deal of criticism from ecological economists." The GPI is a measure of progress proposed by the nonprofit organization Redefining Progress. It is calculated by assuming that some kinds of economic activity are positive and sustainable and others are not. Some of these activities are not included in the GDP. Several of the factors in the GPI—such as labor involved in running the home and volunteering—are considered positive. Negatives in the GPI include factors like the costs of crime, loss of leisure time, costs of pollution, depletion of nonrenewable resources, and loss of farmland. Even though the GDP may steadily rise, the GPI may not because of rising environmental cost as well as depreciation.
"If the GDP is simply unable to measure true economic progress, some other index is necessary. The nonprofit organization Redefining Progress has proposed the Genuine Progress Indicator (GPI) as a measure of economic progress. This index is calculated by assuming that some kinds of economic activity are positive and sustainable and others are not."