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Why GDP is not an appropriate indicator for economic welfare?

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Why GDP is not an appropriate indicator for economic welfare?

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GDP may be a good indicator of economic growth but not of economic welfare or economic development, because of the following reasons :

  1. Ignorance of distribution of income among the population.
  2. Welfare is not a component of GDP calculation.
  3. Non-monetary transactions are ignored.
  4. Externalities (good and bad impact of personal activities on others).
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