Beyond GDP: Measuring Welfare in a Changing Global Economy

Abstract

Economic growth is more accurately measured using real GDP per capita, as it reflects changes in income levels adjusted for population and inflation. While total GDP captures the size of an economy, it does not adequately represent individual economic well-being. However, contemporary global challenges—including inequality, environmental degradation, and declining subjective well-being—have revealed its conceptual and empirical limitations. This paper critically evaluates GDP as a welfare measure and examines alternative frameworks such as the Human Development Index (HDI), Genuine Progress Indicator (GPI), and Multidimensional Poverty Index (MPI). Through empirical comparisons and theoretical analysis, the study demonstrates that GDP growth often diverges from improvements in human welfare. Using cross-country data patterns, the paper highlights how welfare outcomes depend not only on income but also on distribution, social infrastructure, and sustainability. The study argues for a multidimensional measurement framework and recommends policy integration of broader welfare indicators into economic planning.