When things are traded in a market, or embedded in government tax statistics, they are relatively easy to measure. Many of our measurement difficulties arise precisely because

some of the most valuable things are not easily measurable. GDP easily captures the output of washing machines, but not of happiness, health or environmental depreciation. Since we

do not buy and sell clean air or moderate temperatures in a marketplace, governments are not automatically collecting statistics for use in national accounts data.

The United Nations Human Development Index systematically tries to measure three broad dimensions of economic development health, education and material standard of living

and produces annual statistics for all UN member countries. The map below shows the geographic range of outcomes no prizes for guessing which colours represent prosperity

and which represent poverty as measured by the Human Development Index.

Health is crudely captured by life expectancy at birth, education by the proportion of the children enrolled at school and by the proportion of adults who can read, and material

Standard of living by per capita GDP. Some of these indicators are more stable than others. For example, before the financial crash, Iceland came top in the world in the UN measure, and Sierra Leone bottom. But Icelands banks experienced the biggest crash of all, and the Icelandic economy got into serious trouble. This did not immediately affect its adult literacy or the life expectancy of its

population, but these will gradually suffer unless economic prosperity can be restored. Like sausages, economic statistics simply reflect what you put into them. If you care about

democracy, equality or environmental sustainability, dont get hung up merely because your country is not doing well on the particular things that GDP does measure.

People who visit France quickly learn that the French have a good quality of life, better than you would expect simply by looking at their GDP. They enjoy a nice climate, long lunches,

access to Mediterranean beaches and little congestion since they have plenty of land in relation to their population. They also retire at a relatively young age and, having long life

expectancy, spend plenty of happy years in retirement. Their GDP statistics are measuring production of Renault and Peugeot, and of luxuries from Louis Vuitton and Herms, but omit

plentiful leisure, lack of stress and little congestion.

1. Outline the main problems associated with determining national output (GDP: gross national product)

2. Why is the United Nations Human Development index often used?