LEARNING OBJECTIVES
After you have read this section, you should be able to answer the following questions:
- When the focus is on real gross domestic product (real GDP), what aspects of economic welfare are then missed?
- What are some other useful measures of economic welfare?
As you leave Argentina, you might well find yourself wondering about the implications of your work. You know that real GDP decreased, and from your study of the circular flow, you know that income decreased as well. Argentines have become poorer, as you might have guessed from the boarded-up stores you saw when you arrived in the country. You hope that, with the help of your observations, the International Monetary Fund (IMF) and the Argentine government will together find a way to enact good policies to increase the welfare—that is, happiness—of the individuals who live and work in the economy.
Our happiness is surely influenced by our material well-being—our ability to live in comfort; enjoy good food; have access to books, music, computers, and videogames; and so forth. In addition, it depends on our having the leisure time to enjoy these comforts; socialize with our friends; and go to movies, plays, and restaurants. However, our happiness depends on many other factors that are beyond the purview of economics and the influence of economic policymakers. Our happiness depends on our friends, families, health, and much more. Economics cannot help us very much with such matters. So, you wonder, is it enough to look at real GDP?
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