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Hooray for GDP!

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  • Oulton, Nicholas

Abstract

Should raising the growth rate of GDP per capita be a policy goal of governments in general, and of the British government in particular? Many people would say no, for the following reasons: 1) GDP is hopelessly flawed as a measure of welfare; 2) Growing GDP is pointless since most people don’t benefit; 3) Raising GDP per capita is pointless as it doesn't make people any happier; and 4) The planet is finite, so further growth of GDP (at least in rich countries) is not feasible anyway. I discuss and reject all four of these objections. I urge the LSE Growth Commission to focus its efforts on policies to increase the growth rate of GDP per capita in the medium and long run.

Suggested Citation

  • Oulton, Nicholas, 2012. "Hooray for GDP!," LSE Research Online Documents on Economics 47498, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:47498
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    Cited by:

    1. Nicholas Oulton, 2022. "The Productivity-Welfare Linkage: A Decomposition," Discussion Papers 2205, Centre for Macroeconomics (CFM).
    2. Hardy, Daniel C. L., 2023. "Welfare, Autonomy, and Relative GDP," Department of Economics Working Paper Series 330, WU Vienna University of Economics and Business.
    3. Prados de la Escosura, Leandro, 2023. "Health, income, and the preston curve: A long view," Economics & Human Biology, Elsevier, vol. 48(C).
    4. Leandro Prados de la Escosura, 2021. "Augmented human development in the age of globalization," Economic History Review, Economic History Society, vol. 74(4), pages 946-975, November.
    5. Satoshi Araki, 2022. "Does Education Make People Happy? Spotlighting the Overlooked Societal Condition," Journal of Happiness Studies, Springer, vol. 23(2), pages 587-629, February.
    6. Daniel C. L. Hardy, 2023. "Welfare, Autonomy, and Relative GDP," Department of Economics Working Papers wuwp330, Vienna University of Economics and Business, Department of Economics.
    7. Leandro Prados de la Escosura, 2015. "World Human Development: 1870–2007," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 220-247, June.

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    More about this item

    Keywords

    GDP; welfare; inequality; happiness;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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