The Disparities in Measuring National Welfare
The subject tries to identify the disparities that occur during the measurement of the overall national welfare of the country without considering the real changes in the households of the country. In most countries, GDP per Capita is attributed to growth in economic performance at the national level yet this may not indicate the actual situation in a country since data from real household incomes may not be included in measuring the Gross Domestic Product. Therefore, this topic tries to address the issues that lead to divergence in the GDP and median household income growth over time. Moreover, it involves comparative analysis studies of all variables that contribute to growth in per capita income, as well as those leading to income inequalities in a country. All in all, the topic tries to explain why the gross domestic product (GDP) per capita continues to diverge from the mean household income.
Reasons for Choosing the Topic
Why did the authors choose the topic?
The authors chose this topic to evaluate two major macroeconomic issues critically. First, there are instances of growing income inequalities in most countries all over the world. In this case, whereas the national income is increasing the median household income does not represent the same relationship thereby explaining the consistent income inequalities leading to the divergence between Gross Domestic Product Per Capita (GDP) and the median household income. Secondly, the per capita income measures are done using national statistics whereas median household income is done through surveys, leading to cases of mismeasurement and differences in income definitions. Therefore, the authors intended to bring to everyone's understanding of what breeds the divergence in economic growth (GDP) and median household income over time in different states.
Research Questions Addressed
Discuss the research questions authors try to address.
In this article, the authors intend to answer research questions which arise in this study of divergence between economic growth and median household income. These research questions include:
I. Why is there a divergence between Gross Domestic Product (GDP) and median Household income across different countries over time?
II. What is the extent of divergence in GDP and median household income and how it affects different countries?
These research question aims to address why there are income inequalities in various countries as a result of measurement of gross domestic product and median household income. It illustrates all the variables used during the study.
Importance of Addressing the Research Questions
Do the authors discuss why it is important to address these Research Questions?
The authors aim to aid in understanding the growing divergence between GDP and median household income, therefore, addressing the research questions. The research questions help in explaining the divergence effect by analyzing all the relevant variables involved in the measurement of gross domestic product per capita and median household income. Some of the variables considered in answering the research questions are price adjustments, mean household incomes, household sizes, national incomes, and median household incomes. Moreover, data from Organization of Economic Cooperation and Development (OECD), Consumer Price Index (CPI), and Purchasing Power Parities (PPP) of different countries are analyzed and compared from different countries to investigate the extent of GDP per capita and median household incomes in those countries. Furthermore, it is important to address the research questions since they help in building the methodology of the study which explains the divergence in these macroeconomic variables.
