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Now, assuming my analysis is correct, do you think GDP deserve its popularity and why?

GDP is often described vaguely as “the production of wealth” of a country. Here we can see that country B has a significant GDP but did not create any significant wealth in a year.

GDP is often described as the economic “power” or “development” or “health” or “performance” of a country whatever that means. Here I would be more inclined to say that country A is a much more powerful economy, given that everyone got richer. In country B, only 1% of the population worked hard and got richer.

Note that I don’t know much about economics and I’m just trying to use my common sense here. Net wealth change or something like it would seem to meGDP seems like a much bettermore popular indicator of the economic performance of a countryeconomy. However, world leaders keep pushing towardsWhere can I find comparisons between GDP and other measures of economic performance such as the main metric. Why is thatNWC ?

Now, assuming my analysis is correct, do you think GDP deserve its popularity and why?

GDP is often described vaguely as “the production of wealth” of a country. Here we can see that country B has a significant GDP but did not create any significant wealth in a year.

GDP is often described as the economic “power” or “development” or “health” or “performance” of a country whatever that means. Here I would be more inclined to say that country A is a much more powerful economy, given that everyone got richer. In country B, only 1% of the population worked hard and got richer.

Note that I don’t know much about economics and I’m just trying to use my common sense here. Net wealth change or something like it would seem to me like a much better indicator of the economic performance of a country. However, world leaders keep pushing towards GDP as the main metric. Why is that?

GDP is often described vaguely as “the production of wealth” of a country. Here we can see that country B has a significant GDP but did not create any significant wealth in a year.

GDP is often described as the economic “power” or “development” or “health” or “performance” of a country. Here I would be more inclined to say that country A is a much more powerful economy, given that everyone got richer. In country B, only 1% of the population worked hard and got richer.

GDP seems like a more popular indicator of the economy. Where can I find comparisons between GDP and other measures of economic performance such as NWC ?

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jam
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Why is GDP more popular thanisn't Net WealthWorth Change of a country used to calculate its economic power, as opposed to GDP?

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Why is GDP more popular than Net Wealth Change?

As I understand, GDP is the sum of market values of final goods and services produced in a country in a year.

Let me define Net Wealth Change or NWC as the difference between a country’s net worth at the end of the year minus what it was at the beginning of the year. By country net worth I mean the sum of net worth of all its residents. By net worth I mean the sum of values of assets and liabilities owned as is defined here https://en.wikipedia.org/wiki/Net_worth

Note that my question is slightly different from this one : Why isn't National Net Worth of a country used to calculate its economic power, as opposed to GDP? which compares GDP and Net wealth, not net wealth change.

Consider the following situation.

The world that has many countries and a global market where its easy to exchange any good or service from anywhere to anywhere, so market value is always more or less well defined. We want to compare the economy of two countries, Country A and Country B, last year (from date Y - 1 to date Y).

At t = Y - 1, country A had 1 million residents. Each resident had 2000 € in cash and no liabilities. Last year, all country A’s residents decided to spend their whole year mining gold, doing nothing else. In a year time, each resident collected 1000 € worth of gold. At t = Y, country A had 1 million residents. Each resident of country A had a NW of 3000 €.

At t = Y - 1, country B had 1 million residents. Each resident had 2000 € in cash and no liabilities. In country B, there are 10000 massage therapists. Last year, all country B’s residents decided to spend their whole year going to massage therapists, doing nothing else. Each resident spent 1000 € getting massages. The 1 million residents went to the 10000 different therapists in even proportion, so that each therapist had 100 customers who each spent 1000€. At t = Y, country B had 1 million residents. 99% of residents who are not therapists had 1000 € left on their bank account. 1 % of residents who are therapists had each 101000 €.

Economic analysis

Country A’s GDP = 1 B €, because in a year 1000 € x 1000000 of gold was produced.

Country A’s NWC = +1 B €, because at Y – 1, NW was 2B € and at Y, NW was 3B€.

Country B’s GDP = 1 B€, because in a year 1000 € x 1000000 worth of massages were provided.

Country B’s NWC = 0 €, because at Y – 1, NW was 2B € and at Y, NW was 990000 x 1000 + 101000 x 10000 = 2B €.

Now, assuming my analysis is correct, do you think GDP deserve its popularity and why?

GDP is often described vaguely as “the production of wealth” of a country. Here we can see that country B has a significant GDP but did not create any significant wealth in a year.

GDP is often described as the economic “power” or “development” or “health” or “performance” of a country whatever that means. Here I would be more inclined to say that country A is a much more powerful economy, given that everyone got richer. In country B, only 1% of the population worked hard and got richer.

GDP is so used that “Economic growth” is often defined as the variation of GDP from one year to the next. Why isn’t “Economic growth” defined as the variation of NWC?

Note that I don’t know much about economics and I’m just trying to use my common sense here. Net wealth change or something like it would seem to me like a much better indicator of the economic performance of a country. However, world leaders keep pushing towards GDP as the main metric. Why is that?