GDP is not very good at measuring quality of life, because it values marketable goods and services and not factors that determine quality of life, such as safety, work-life balance, and life satisfaction of the citizens, all of which, according to the OECD, determine the quality of life. But without GDP, where would the quality of life come?

GDP is great to measure the aggregate value of goods and services being produced within a country and sold on the market. But although it is an amazing measuring device, GDP is often criticized because it only measures aggregate market activity and doesn’t measure anything that can’t be counted in terms of market prices. GDP is important to both quality of life and security.

GDP is the market value of all final goods and services produced in a country within a given time frame, and GDP per capita is GDP divided by the population to find out the value per citizen. It is calculated by finding out what households, governments, and firms spend in the market; after all, what they are buying must have been produced by someone. Not what people enjoy without trading.