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As an economist how would you tackle the task of comparing the welfare of a citizen of a country like India with that of a citizen of a country of the United States?

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Introduction

AS AN ECONOMIST HOW WOULD YOU TACKLE THE TASK OF COMPARING THE WELFARE OF A CITIZEN OF A COUNTRY LIKE INDIA WITH THAT OF A CITIZEN OF A COUNTRY OF THE UNITED STATES? WHAT WOULD BE THE MAIN PROBLEMS INVOLVED? Welfare is another way of saying standard of living or quality of life. It takes into account various things, such as housing, education and healthcare. Welfare is a very subjective thing and it is difficult to put a figure on it. However, one way of measuring the welfare of a country is to look at the real Gross National Product per capita (GNP). The other way would be to look at the Human Development Index (HDI). GNP looks at the gross domestic product (GDP) of a country and also the net property income from abroad. GDP can be measured in three ways, looking at output, income or expenditure. If looking at output, all three levels of output need to be included, extraction, manufacturing and services. At each stage it is the value added to the product that is counted and not the total value. ...read more.

Middle

Although the size of the population is taken into account, the distribution of income within that population is not. For example in the United States the wealth is spread a lot more evenly than in India, where the majority of the wealth is held by a very small minority, and so the GNP is a lot less representative. In India a very small proportion of the population enjoys the majority of the country's wealth, whereas in the USA, whilst not everyone is equal, the disparity between those with the highest wealth and those with the lowest is a lot narrower. This means that the GNP will not show an average for the whole country, as, especially in India, the average will be brought up significantly by the few within the country with a high wealth. This can be shown on a Lorenz Curve: The nature of the output of each country is also not taken into account when looking at GNP. This can have a great effect on the welfare of the citizens of a country. ...read more.

Conclusion

This will have a significant effect on people's living standards as with further education, a better level of employment could be found. It is likely that there is a higher proportion of the population going onto tertiary education in the USA than in India. The welfare of a country is very hard to measure, especially as quality of life is a very subjective thing. Different people see different things to be important. There are also no measures for many of the things that come into the quality of life. There are also many problems when using GNP or HDI to compare two countries, especially when the two countries are so different as the USA and India are. Welfare is very hard to put a figure to as although there are a lot of factors which affect the welfare of a country, few of them have numerical values and therefore it is hard to put one figure on welfare as a total. The figures used, GNP and HDI do not take into account many of the things, which could be seen by some to have an important bearing on the welfare of a country, but these two measures are the closest thing that there is to a realistic measure of welfare. ...read more.

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