Question

Do you think income is the perfect measuring rod of economic development.

Answer 1

Economic growth is basically an accounting measure. It measures how much money is changing hands in the economy. Growth occurs when the value and number of commercial transactions increase in the economy. For example, if you cook food at home, the GDP doesn't increase. But if you eat at a restaurant, it does. Similarly, if parents raise their children directly, GDP doesn't increase. But when parents put their kids in a daycare center, then GDP increases. Thus, it's only an account of the growth in the number of commercial transactions in the economy. It's not a very good measure to understand development of a society. It is also highly value-neutral, which can be a bad thing.