- GDP measures total market value of goods and services produced.
- It does not claim to measure welfare, wellbeing, inequality, or happiness.
- Limitations:
- It does not include its distribution (how wealth is shared).
- It does not account for externalities (like pollution).
- It excludes activities at home (unpaid household work).
- An economy can have rising inequality, pollution, yet rising GDP.
- It is a proxy for welfare but not designed for this task.
- It needs to be complemented with broader indicators for wellbeing.