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Best economic indicators for the economic health of a country?

  1. Jan 12, 2011 #1
    Hi all. Let me start by saying that I am not an economist, I just have a question about economics and I'm hoping some of you bright minds can help me out.

    I'm trying to understand how to evaluate the economic performance of a country over time. What metrics should I look at, and how can I find historical data for them?
  2. jcsd
  3. Jan 13, 2011 #2
    Well GDP or Gross Domestic Product is a good start. GDP = private consumption + gross investment + government spending + (exports − imports).
  4. Jan 13, 2011 #3


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    There's lots of discussion over whether GDP really measures what you care about, since it is just a measure of economic activity and doesn't care about quality of life or the type of economic activity. There are several alternative measures that have been proposed that try to look at these things as well. Try looking at these:

  5. Jan 13, 2011 #4
    Oh, well in MY opinion I think GDP is complete nonsense. But I didn't want to get in to all that! Not in this thread. The mainstream veiw is that GDP is a good indicator.
  6. Jan 13, 2011 #5
    I'm aware of GDP being used, but it doesn't contain all the information I want.

    For example, I'd like to measure the level of disparity / distribution of wealth. Brazil, for example, has the 8th largest GDP, but has huge disparity and many people are living in shanty-towns.
  7. Jan 13, 2011 #6
    I'd like to suggest (for analysis of US) that you compare GDP to GNP trends over time.
  8. Jan 13, 2011 #7
    Is there an index which shows% of family income needed for food, housing, healthcare etc?
    Seems that this would do a good job of comparing lifestyles across countries and history.
  9. Jan 13, 2011 #8


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    Ther's an index that does this, called the Gini coefficient. As you said, Brazil ranks at the very top (most unequal). However, the US is catching up fast!

  10. Jan 18, 2011 #9
    The unemployment rate is another one, as is stock prices, money supply (M2), number of new building permits issued
  11. Jan 18, 2011 #10
    The savings rate is also important.
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aexjnfkHISt0 [Broken]
    Last edited by a moderator: May 5, 2017
  12. Jan 19, 2011 #11
    If you think "GDP is complete nonsense," why would you promote the view ('mainstream' or otherwise) that it's a good indicator? The OP asked what the best way to measure economic health is, so why don't you just answer it according to your own best judgment?
  13. Jan 19, 2011 #12
    The GDP can be useful - if you track it against other indicators, trends, and events.
  14. Jan 19, 2011 #13


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    There needs to be an index that combines inequality with gdp in order to get a clearer view of where people stand. Just using gini, you can end up with the ridiculous conclusion that a Brazilian living in a tin shack and an American with cable tv and air conditioning are equally poor.
  15. Jan 20, 2011 #14
    You need to go further than that, because you could also come to the conclusion that the person watching TV all day and gaining weight in the air conditioning, who is losing their health and feeling of self-worth is more prosperous than the person living in a tin shack who has gotten their basic needs taken care of by means of a rigorous daily routine of water-fetching, subsistence agriculture, and other work to improve their dwelling and develop one step further in improving their living conditions. Of course, the same person in the same conditions can be miserable when the shack is falling apart, no suitable scrap materials can be found to replace it, someone bullied them away from their water-source, and/or their subsistence agriculture is having problems. Then you could say that the poor person with a house, TV, and air-conditioning is richer, especially when they are getting in shape, getting along with people, figuring out new strategies for improving their living conditions, etc.
  16. Jan 20, 2011 #15
    When compared to other indicators over time, GDP tends to be more meaningful. This comparison to GNP demonstrates some of the differences between GDP and GNP.


    IMO - it's important to highlight world events along the comparison timeline.
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