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Old 2012-04-18, 01:20 PM   [Ignore Me] #153
Lieutenant General
Re: Santorum Drops Out

Originally Posted by elfailo View Post
I like how the wikipedia article mentions this:
Indeed it does. Hence why simply looking at the total production is not a really good indication of wealth. If you look further, it also states in a related article:

Standard of living and GDP

GDP per capita is not a measurement of the standard of living in an economy. However, it is often used as such an indicator, on the rationale that all citizens would benefit from their country's increased economic production. Similarly, GDP per capita is not a measure of personal income. GDP may increase while real incomes for the majority decline. The major advantage of GDP per capita as an indicator of standard of living is that it is measured frequently, widely, and consistently. It is measured frequently in that most countries provide information on GDP on a quarterly basis, allowing trends to be seen quickly. It is measured widely in that some measure of GDP is available for almost every country in the world, allowing inter-country comparisons. It is measured consistently in that the technical definition of GDP is relatively consistent among countries.

The major disadvantage is that it is not a measure of standard of living. GDP is intended to be a measure of total national economic activity—a separate concept.

The argument for using GDP as a standard-of-living proxy is not that it is a good indicator of the absolute level of standard of living, but that living standards tend to move with per-capita GDP, so that changes in living standards are readily detected through changes in GDP.

It's a tricky thing to use in general, simply saying "richest country in the world" doesn't really tell the whole story.

I mean, if we look at this chart:

What does that say about the Chinese if you DON'T look at it on a per capita basis? (If not taking into account the EU as a whole, where the US goes from #1 nominal to 15 per capita, China goes from #2 nominal to #92 per capita! HUGE difference!). Without a doubt the US is the biggest consumer economy in the world, but to say that means it is the wealthiest or best overall is cutting corners everywhere.
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