GDP per capita is often used as an indicator of welfare in an economy. While this approach has advantages, there are also many criticisms on GDP as an indicator of standard of living or welfare. The major advantages to using GDP per capita as an indicator of standard of living are that it is measured frequently, widely and consistently. Another advantage is that it is used in all countries which allow crude comparisons of the standard of living in different countries.
             The major disadvantage of using GDP as an indicator of standard of living is that it is not, strictly speaking, a measure of standard of living or welfare. GDP is intended to be a measure of particular types of economic activity within a country. For instance, in an extreme example, a country which exported 100 per cent of its production would still have a high GDP, but a very poor standard of living.
             There are many negative points raised against GDP as a measure of welfare of a country. Firstly, GDP attempts to remove value judgments on spending. All transactions are neutral; neither good nor bad. The costs of a major natural or ecological disaster cause an increase in GDP. So do the costs involved in a car accident or aggravated burglary – health bills; cost of replacing property; police work; counseling. Both of these examples are obviously bad for our well-being, but GDP counts the results of them as positives. GDP also counts the shorter life span of products as a positive, since more would be sold. Secondly, many items are left out of the accounting that makes up GDP, mostly because they are hard to put values on. But leaving out domestic work, voluntary work, the underground economy, etc means that they are ignored in much government policy. Resource depletion and environmental damage also do not appear within GDP except with the costs of clean-ups.
             Gross Domestic Product (GDP) is the broadest quantitative measure of a nation's total economic activity...