Reply #11: In gauging living standards, GDP often misses mark

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NEW YORK (Reuters) - Economic growth is often equated with better living standards, but critics argue that expansion alone may not always lead to greater prosperity.

Per capita gross domestic product, one of the broadest measures of economic output, often measures the wrong thing, some analysts say. It also completely misses the issue of how wealth is distributed, painting a misleading picture of national well-being.

In the United States, for instance, GDP increased at a solid 3.8 percent clip in the first quarter, according to a report published last week.

Yet two years of robust growth have failed to bring the sort of employment and wage gains associated with past economic recoveries, preventing many from reaping its benefits.

"GDP per capita is a bad measure, because it leaves out the whole question of distribution," said Anwar Shaikh, a professor of economics at New York's New School University.

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If the U.S. government buys a multibillion dollar aircraft carrier, for instance, it makes a huge contribution to GDP even though most Americans might not benefit directly from the purchase.

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