Gross Domestic Product (GDP) Measures

Gross Domestic Product (GDP) measures the economic rate of growth in a country. GDP is defined as the sum of the market prices and values of the final products and services that an economy produces within a given period. GDP as a number expresses the value of the productivity of the local currency of a country. The GDP of a country is usually calculated either annually or quarterly. Gross domestic product attempts to capture all the final commodities and services that are produced in that country. This gives the exact measure and value of all the products and services that the country produces. The GDP of any country consists of different components which, when determining the GDP, are measured and have their value recorded. This paper examines the measures of GDP and how it relates with social well-being of the people.

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The GDP components include consumer spending, investments, government spending, and net exports. Consumer spending (C) is calculated by summing up the expenditures on households including the durable and non-durable goods and the services. For example, consumer spending goods and services include food and health care. Investment (I) includes the total sum of spending on inventories, capital equipment, and structures. Some of the examples include housing, machinery, and unsold products. Government spending (G) measures theexpenditure by public institutions on both goods and services. Some of the examples include wages and salaries of public employees. Net exports (NX) are calculated by the difference between domestic expenditure by foreigners and the foreign spending by residents. In simple words, net exports are the measure of the disparity between imports and exports (Miller, & Benjamin, 2015).

GDP = C + I +G + NX

Limitations of Using GDP

The use of GDP for measuring any country's living standards gives incomplete values. The reason to this is that the GDP fails to include numerous productive activities since it is designed only to measure produced output and those commodities and services sold in the legal markets. Gross Domestic Product fails to include the productive activities that lack a market operation. Therefore, GDP cannot be described as a perfect quality for measuring the value of life. The quality of life is described by the level of fulfillment individuals find in their lives. The GDP fails to consider in what ways output adds to the value of people's lives as it only measures the amount of output a nation produces. Additionally, GDP fails to determine the quality of the surrounding by not considering things such as pollution and the costs of regulating environmental degradation. Also, when calculating GDP, the extent to which leisure adds to the quality of life is assumed (Giannetti, 2015). A country may be having a high GDP value, but the people involved in production do not get any free time.

Relationship between Economic Well-being and Social Well-being

Economic growth does not necessarily lead to improved quality of life in high- income societies but can be problematic. Economic well-being will contribute both costs and benefits when assessed as contributor to welfare of human beings. When poor communities are considered, economic growth will offer material goods and services that will satisfy urgent wants. In well-off societies, growth will generate both sets of environmental and social costs due to increased consumption. Most people gain satisfaction from consumption of products and services especially when they are allowed to choose what they prefer most. The result is always happiness which contributes to positive welfare (Howarth, 2012). Therefore, it can be argued that economic welfare and social well-being of the people are related and the economic growth will contribute to social welfare when other factors such as costs of goods, services, and mitigation of the environment are ignored. Those from poor societies gain satisfaction when given free goods and services by the government while those from affluent communities can afford their needs but at a higher cost which does not satisfy their social needs such as happiness. The relationship between economic and social well-being can only be achieved if the world can attain sustainable development. Sustainability will ensure that people in the society can meet their needs and the costs of living will also be low since factors such as environmental pollution will be reduced (Howarth, 2012).

Alignment with Saint Leo's Core Values of Personal Development

Saint Leo's core value of personal development focuses on developing personal character and the life of an individual. It focuses on improving individual life whereas economic development is all about working together(Dadez, 2013). Therefore, it can be argued that the personal growth core value does not align with productivity and economic growth since the two are a collective activity that involves working together with different people in the society. Saint Leo's core value of personal development concentrates on individual welfare which cannot operate together with economic growth. The aim of this value is to serve all people in the community instead of giving back. When compared to the GPD, whose primary focus is productivity alone, the personal development core disagrees with it since it focuses on improving the personal welfare of an individual (Dadez, 2013).

Conclusion

In summary, GDP measures the total output of a country that includes the goods and services produced. The components of GDP include consumer spending, investments, government spending, and net exports. GDP is considered incomplete since it does not include products and services that have no legal market operations. Economic well-being and social well-being are two terms that relate but can be argued that economic well-being does not necessary lead to social satisfaction. An individual may be economically well-off but the cost of acquiring the economic benefits comes with a cost of limiting ones leisure. Saint Leo's core value of personal development does not align with the GDP since it focuses on individual growth whereas GDP is a collective approach.

References

Dadez, M. (2013). Saint Leo University Core Values. Prezi. Retrieved from https://prezi.com/r49ch2a0kmz6/saint-leo-university-core-values/

Giannetti, B. F., Agostinho, F., Almeida, C. M. V. B., &Huisingh, D. (2015). A review of limitations of GDP and alternative indices to monitor human wellbeing and to manage eco-system functionality. Journal of Cleaner Production, 87, 11-25.

Howarth, R. (2012). Sustainability, Well-Being, and Economic Growth. Center For Humans & Nature Expanding Our Natural & Civic Imagination. Retrieved from http://www.humansandnature.org/sustainability-well-being-and-economic-growth

Miller, R. L., & Benjamin, D. K. (2015). The economics of macro issues. Pearson.