If you could choose your own measure of national output, what would it be? How would you construct it and why would it improve on GDP?

     GDP is a flawed, but the most commonly used measure of national output. One of its disadvantages is double counting of goods, which makes GDP overvalued. Another problem is existence of the underground economy, which is not taken into account and therefore lowers GDP. Another flaw is not being able to account for productivity of some services (e.g. hospitals, schools or charities). At the same time, some ways of measuring GDP include sectors which do not actually produce anything (e.g. property letting). These flaws mean that the value obtained may simply be untrue and not show the actual wealth of a country.

     Any measure of national output intended to replace GDP would have to consider the aforementioned issues. In addition, it should account for “negative” products which could hinder future development (especially pollution). However, such a measure would be very complicated. GDP is fairly simple to calculate and GDP per capita gives a quite accurate picture of country’s development, allowing for comparisons between different states.