Gross Domestic Product (GDP) Measure

A Gross Domestic Product (GDP) Measure is an economic output measure that measures economic output (based on the market value of all final products produced within a regional market in a given time period).

• Context:
  • Measure Output: GDP Quantity.
  • It can range from being a Raw GDP Measure to being an Inflation-Adjusted GDP Measure.
  • It can range from (typically) being Annual GDP to being Monthly GDP, ...
  • It can be a Sectoral GDP, such as Agriculture GDP, Industry GPD, Services GDP.
  • It can be a Normalized Measure, such as by a GDP per Capita Measure.
  • It can be related to the Regional Debt, such as by a Debt per GDP Ratio.
  • It can be related to a temporal measure, such as a GDP Growth Rate.
  • It can be modeled by a GDP Prediction Model (for a GDP estimate).
  • It can range from be a PPP GPD, to being a US$ GDP, Euro GDP, or ...
  • It can be associated to a Relative-to-GDP based Measure.
  • It can be correlated to
  • …
• Example(s):
  • Global GDP Measure (of a global GDP)
  • a National GDP Measure, such as U.S. GDP, Chinese GDP, ...
  • a Regional GDP Measure, such as a California GDP, Tokyo GDP.
  • Agriculture GDP, Industry GPD, Services GDP.
  • …
• Counter-Example(s):
  • a GNP Measure.
  • a GVA Measure.
  • Worforce Productivity.
  • Gross National Debt.
• See: Output Volume Measure, Health Care, Debt to GDP Ratio, Standard Of Living, Gross Domestic Income, National Accounts, Macroeconomics, Gross National Product.

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References

2023

• https://noahpinion.blog/p/thoughts-on-techno-optimism
  • QUOTE: ... The idea of increasing humanity’s collective set of choices is closely related to the economic concept of GDP. GDP is defined by how much people choose to pay, in total, for the things we produce; in other words, it’s just a measure of human choice. It’s not a perfect correspondence, because there’s stuff that GDP leaves out (leisure, inequality, and so on). But it’s pretty closely related. This is why a lot of people talk about the benefits of technology by pointing to a graph like this:

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Gross_domestic_product Retrieved:2014-4-6.
  • Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time. GDP per capita is often considered an indicator of a country's standard of living.

    GDP per capita is not a measure of personal income (See Standard of living and GDP). Under economic theory, GDP per capita exactly equals the gross domestic income (GDI) per capita (See Gross domestic income).

    GDP is related to national accounts, a subject in macroeconomics. GDP is not to be confused with gross national product (GNP) which allocates production based on ownership.

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Gross_domestic_product#Income_approach Retrieved:2014-4-6.
  • " Sum total of incomes of individuals living in a country during 1 year ."

    Another way of measuring GDP is to measure total income. If GDP is calculated this way it is sometimes called gross domestic income (GDI), or GDP(I).

    GDI should provide the same amount as the expenditure method described below. (By definition, GDI = GDP. In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies.)

    This method measures GDP by adding incomes that firms pay households for factors of production they hire- wages for labour, interest for capital, rent for land and profits for entrepreneurship.

    The US "National Income and Expenditure Accounts" divide incomes into five categories:

    1. Wages, salaries, and supplementary labour income
    2. Corporate profits
    3. Interest and miscellaneous investment income
    4. Farmers' incomes
    5. Income from non-farm unincorporated businesses
  • These five income components sum to net domestic income at factor cost.

    Two adjustments must be made to get GDP:

    1. Indirect taxes minus subsidies are added to get from factor cost to market prices.
    2. Depreciation (or capital consumption allowance) is added to get from net domestic product to gross domestic product.
  • Total income can be subdivided according to various schemes, leading to various formulae for GDP measured by the income approach. A common one is:

     : GDP = compensation of employees + gross operating surplus + gross mixed income + taxes less subsidies on production and imports

     : GDP = COE + GOS + GMI + T_{P & M} – S_{P & M}

    • Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to social security and other such programs.
    • Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses. Often called profits, although only a subset of total costs are subtracted from gross output to calculate GOS.
    • Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses.
  • The sum of COE, GOS and GMI is called total factor income; it is the income of all of the factors of production in society. It measures the value of GDP at factor (basic) prices. The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP at factor cost to GDP(I).

    Total factor income is also sometimes expressed as:

     :Total factor income = employee compensation + corporate profits + proprietor's income + rental income + net interest

    Yet another formula for GDP by the income method is:  :[math]\displaystyle{ GDP = R + I + P + SA + W }[/math]

    where R : rents
    I : interests
    P : profits
    SA : statistical adjustments (corporate income taxes, dividends, undistributed corporate profits)
    W : wages.

2010

• (Stiglitz et al., 2010) ⇒ Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi. (2010). “Mismeasuring Our Lives: Why GDP Doesn't Add Up." New Press. ISBN:1595585192

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