Why does growth in real GDP per capita not actually reflect an improvement in the well being of society?

Question

Why is the public usually worse off, even though there is growth in GDP..

Answer 1

I heard a discussion of this on the radio about the 'Chicago School' of Economics, which is the basis of the Bush Administration's policies. Basically, they feel that the goal is growth, and that growth is the only measure that matters. Other measures, such as inflation, salaries, etc. are less important and can be more or less ignored.

The Bush Admin loves to cite that the economy is growing, but if you ask normal people how they think the economy is going, they report that they have less disposable income, have greater debt, have less savings, have less job security, and generally feel the economy sucks.

Also note, the Chicago School likes to make grandiose statements that are not supported by the facts. For example, the idea that raising the minimum wage will lead to unemployment is from one of their 'models', however, in every state/city that has raised the minimum wage, none of them has seen a significant increase in unemployment.

Answer 2

it's only useful when applied with other measures. how useful is a 100% pay increase coupled with a 300% cost in living expenses? governments may try to sell you that bullsh*t, but you don't have to buy it. also consider the dispersion of earnings. if the top percentile of earners increase their incomes, while the bottom percentile's incomes remain constant, the gdp spread over the same amount of people is higher even though, those who really need it and are on the poverty line haven't benefited at all. economics is about the bigger picture.it's not a set of rules, but an artform.

Answer 3

The question is incorrect. It IS a benefit to society to have an increasing GDP.

Answer 4

because it depends on the distribution of income. if bill gates increases gdp by himself, society is not any happier.