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What Value is Gross Domestic Product as a Macroeconomic Indicator of National Income, Well-Being, And Environmental Stress?

Philip Lawn


Gross Domestic Product (GDP) is a monetary measure of the goods and services annually produced by domestically located factors of production. The contention expressed in this paper is that GDP ¾ in particular, real GDP ¾ is little more than an indicator of the annual volume of national economic activity. GDP is a poor measure of national income; is unable to accurately reveal any qualitative improvements in newly produced goods and services; is an inadequate indicator of sustainable economic welfare; is a less-than-ideal indicator of both the rate of throughput and the environmental pressure exerted by economic activity; and cannot even be used to measure the growth rate of a nation’s economy. In sum, we urgently need to abandon GDP and look for alternative indicators of national income, welfare, and environmental pressure. This paper reveals some viable alternatives to GDP.


Gross Domestic Product, national income, welfare, environmental pressure

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