Why GDP fails as a measure of well-being There is a new reason why GDP is a poor measure of economic well-being: It doesn't measure the benefits we gain from free apps and lots of other free stuff on the Internet. And none of the other indexes deal with this problem. Source: CBS News, January 27, 2016 What are the other reasons why GDP is a poor measure of economic well-being? GDP is a poor measure of economic well-being because it _______. A. includes only production that is traded in markets B. fluctuates more than potential GDP C. exaggerates the depth of recessions and the height of expansions D. includes items such as political freedom which cannot be accurately measured

Explanation : The GDP is used as an indicator in determining whether the country concerned is experiencing economic growth, decline, or stagnant. The per capita income is the total GNP of a country divided by total population. It gives the average income in a given country and it serves as an economic indicator to determine the level of standard of living .

The standard of living refers to the extent to which individuals or families can satisfy their wants. It indicates the volume of available goods and services at the disposal of individuals and therefore shows the level of their welfare. The standard of living depends on a variety of factors such as size of the national income, the total population, the method of distribution of the national income, differences in price level of goods and services, as well as the differences in currency..

Therefore, GDP is not a good measure of welfare because there is a difficulties in using per capita income in measuring the standard of living because, it does not take into account the conditions under which the income is produced and the working hours spent in producing the goods , it does not also take into account the income distribution and the pattern of ownership of assets which generate part of people's income.