Eli5: What is gdp? Why its so important? And why a lot of polls not using it are said to be misleading?
In: Economics
Gross Domestic Product. It’s the total value of everything – all goods and services – produced in a country during a specific time period, usually a year.
GDP it gives us a snapshot of how well a country’s economy is doing. If GDP is going up, it means the economy is growing, people are buying more stuff, businesses are doing well, and there’s more money moving around. If GDP is going down, the opposite is happening: the economy might be shrinking, people are buying less, businesses are struggling, and there’s less money in circulation.
Polls or statistics that don’t use GDP can bee misleading because they might not be considering the overall economic health or growth. GDP is one of the most comprehensive ways to measure an economy’s size and health. Without it, polls miss the bigger picture or focus on less important numbers, which could give people the wrong idea about how the economy is actually doing.
In other words, GDP is a key piece of the puzzle for understanding a country’s economic condition, and without it, you might not see the full story.
The other comment is a very good answer, I just thought I’d provide a little extra context.
“Why would it be excluded as a metric if it’s so useful?”, you might be thinking. And that’s because it what they’d call a “macroeconomic” factor, meaning it works on a large scale—the whole country— and a large scale only. Overreliance on macroeconomic factors falls under criticism because, for example in the case of GDP, it just means that *someone* is making money.
If 99% of the population lives in abject poverty scraping together scraps to live while slaving away for peanuts, and the other 1% is an exploitative megacorporation throwing babies into a woodchipper for record profits, the takeaway is “the economy is on the right track!”
GDP is a terrible measure of a country’s productivity and wealth. It takes no account of a population’s actual level of contentedness, income inequality, or environmental decay due to economic activity. Basically it only measures business numbers. Which for normal plebians, is all but meaningless.
Relying on it as a measure is ridiculously naïve and can be misleading. Some commentators and polls *using it* and some *not using it* will be trying to pull the wool over people’s eyes.
Don’t trust it alone.
Additional details about the various way GDP is lacking as a measure of economic activity via a google search.
It’s when you pay one guy $20 to dig a hole, another $20 to fill it, and suddenly you have added 2 jobs to the economy and boosted GDP by $40.
It’s a get-rich-quick hack to rig the international market with your own arbitrary numbers and standards! Only governments can use it though.
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