What GDP Leaves Out

GDP is powerful but narrow, and its blind spots matter for comparing countries. It ignores unpaid work such as caring for children and elderly relatives, cooking and cleaning, even though this labor is essential and is done disproportionately by women. It undercounts the informal economy of street vendors and casual laborers, which in many low-income countries employs most workers.

It also treats spending on repairing damage, such as cleaning up an oil spill, as an addition to output, while the loss of forests, fish stocks or clean air is not subtracted. Leisure, health and security count for nothing unless they pass through markets. Free digital services like search engines and online maps are hard to value because users pay no direct price. For these reasons economists treat GDP as a measure of market activity, and they pair it with other indicators when judging how well people actually live.