Disagree: GDP is a perfect measure of welfare.

A country should use a good system in measuring its economic development. Thus, the country can use
the data that has been generated from the measurement as a basis for policy making. One of the
measuring tools that is often used to assess the economic development of a country is the Gross
Domestic Product (GDP).

Gross product, a measure of economic activity in a country. It is calculated by adding the total value of a
country's annual output of goods and services. GDP = private consumption + investment + public
spending + the change in inventories + (exports - imports). It is usually valued at market prices; by
subtracting indirect tax and adding any government subsidy, however, GDP can be calculated at factor
cost. This measure more accurately reveals the income paid to factors of production. Adding income
earned by domestic residents from their investments abroad, and subtracting income paid from the
country to investors abroad, gives the country's gross national product (GNP).

The effect of inflation can be eliminated by measuring GDP growth in constant real prices. However,
some economists argue that hitting a nominal GDP target should be the main goal of macroeconomic
policy. This is because it would remind policymakers to take into account the effect of their decisions on
inflation, as well as on growth. GDP can be calculated in three ways. The income method adds the
income of residents (individuals and firms) derived from the production of goods and services. The
output method adds the value of output from the different sectors of the economy. The expenditure
method totals spending on goods and services produced by residents, before allowing for depreciation
and capital consumption. As one person's output is another person's income, which in turn becomes
expenditure, these three measures ought to be identical. They rarely are because of statistical
imperfections. Furthermore, the output and income measures exclude unreported economic activity
that takes place in the black economy but that may be captured by the expenditure measure.

GDP (Gross Domestic Income) only pays attention to the amount of national income. This amount
represents gross income, which still includes foreign party income in Indonesia. To get the best
benchmark for the level of welfare, it would be better not only to look at GDP, but also to look at other
sectors (including qualitative ones). The level of welfare can be seen from the level of education, health
level, illiteracy rate, life expectancy, and others.

In fact, income per capita cannot be a good measure of welfare. Per capita income simply divides
national income by the total population. Thus, GDP cannot be said to be a perfect measure of the level
of welfare.