Question

What are weaknesses of using national income statistics as a measure of social welfare?

Answer 1

Weaknesses of using national income statistics as a measure of social welfare are;

• Bulk of the wealth held by a few people/Unequal distribution of income
• Wealth is created in the expense of peoples health/time for rest and recreation or leisure/no time for family etc.
• Increased productivity but there is massive environmental pollution
• Inflation i.e the price level could have risen by the same proportion as per capital income.
• Most of the income made due to improvement is all put into more investment and not on improving for instance own housing.
• Government may be using income earned on goods and services such as military facilities which does not directly improves people‘s standards of living.