GDP Has a Glaring Blind Spot

When you read words like “output,” “economic growth” or “national income,” you’re almost always reading about gross domestic product. This measure, more than any other, has come to be equated with national prosperity and living standards. We use it to compare countries with each other, and also to compare the present with the past.

But GDP misses many important things. It neglects the value of leisure time, and of all the activities that people do outside of their jobs -- cook food, take care of kids or listen to each other’s problems. Others note that it neglects to consider environmental QuickTake GDP and economic inequality. A few have even suggested supplementing GDP with measures of national happiness.
GDP

But I want to point out a more prosaic and boring, yet also more subtle and insidious problem with GDP -- it fails to account for quality differences. And these can be large.