Faith and Economic Indicators (GDP and HDI) - is there such thing as a perfect indicator?

Faith and Economic Indicators Paper

The study of macroeconomics revolves around large-scale or general economic factors, such as interest rates and national productivity. Those large-scale economic factors could be measured with various indicators, such as Gross Domestic Product (GDP) and the Human Development Index (HDI). Throughout this paper, I will first discuss the meaning of GDP and HDI, the strengths and weaknesses of HDI, the Biblical poverty indicator, and the comparison of the indicators. Although the indicators are different from each other, each contributes a certain perspective towards the study of macroeconomics in a nation.

Gross Domestic Product is an indicator that measures the market value of all final goods and services produced within a country in a given period of time. In order to understand GDP comprehensively, it is best to break down the meaning word by word. First, the “market value” is calculated using market prices. Do note that GDP’s market value does not include illegal goods or services that are sold in the markets. Second, “of goods and services” includes both tangible good and intangible services. Tangible goods are the goods that we can touch, such as computers, pencils, food, etc. Meanwhile, intangible services require human knowledge, such as a lawyer, teacher, doctor, etc. Third, the word “produced” in the GDP reflects only the current production. If someone sold a used car, then it would not be included in the GDP calculation. Next, “within a country” defines the goods and services produced domestically regardless of the nationality of the producer. Lastly, “in a given period of time” conveys the idea of time by yearly or quarterly. Then, what does GDP per person mean? GDP per person, or GDP per capita, is a measure of a country's economic output that accounts for its number of people. It divides the country's gross domestic product by its total population. Hence, GDP emphasized more on the quantitative measure of a nation’s national economic activity.

Until this day, there is no specific indicator that could compute every aspect that contributed to humanity’s standard of living. GDP might calculate the economic output of everyone, but it does not take into consideration other aspects that define human well-being like life expectancy and educational attainment. Meanwhile, HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone. Based on the United Nations Development Program, the HDI measures three different dimensions in human development: life expectancy at birth, education, and the standard of living dimension. This covers the aspects that the GDP does not measure, which puts it as an advantage indicator for this purpose. In addition to that, HDI does not rely merely on the economic indicator, but it also takes consideration of the other, more social ways of measuring. This enhances the government to develop the infrastructures more in the health side and not just the economy side. However, HDI does have some weaknesses such as the data gathered is more subjective than objective. The rank of education based on each person might differ from others, and therefore bringing the result to be more arbitrary to some people.

If there are no indicators as of today that could measure every aspect of one’s life, then as a Christian, what can we do to at least make the world a better place? In the previous paragraph, we have seen the definition of GDP and HDI and its comparison. Each indicator has its own role in their involvement in giving progress to a nation’s economy. If we know the level of economy in a certain nation, then we must do something to help the people to gain a better standard of living. In Luke 14:13-14 Jesus said, “But when you give a banquet, invite the poor, the crippled, the lame, the blind, and you will be blessed. Although they cannot repay you, you will be repaid at the resurrection of the righteous” (NIV). Through this verse, Jesus wants to imply that there must be a movement to help the poor. Just because we live in a country where we have a decent amount of GDP per person, does not mean that there are no poor people in the US. We obviously still can see unemployed people in the streets, not having any place to live. Therefore, we must be sensitive in our surroundings. When there is an opportunity to serve the poor, then we should do it. As we are made in the image of God, then we must follow his steps in serving the poor. An effortless small step that we could do is having the sense of pity to the poor: “If anyone has material possessions and sees a brother or sister in need but has no pity on them, how can the love of God be in that person? Dear children, let us not love with words or speech but with actions and in truth” (NIV 1 John 3:17-18). After taking the first step in having a sense of pity, we must move on to do an action for the poor. “Give proper recognition to those widows who are really in need” (NIV 1 Timothy 5:3). Poor does not always mean having less money, but it also could be determined by the education gained, the health dimension, and the standard of living for each person. However, I do think that we can expand the dimensions more by evaluating the standard of living not just based on the income, but also looking at the accessibility to resources such as water, sanitation, electricity, housing, and many more. Instead of looking only at the number of resources available, we could also create an indicator that divides the number of resources available per the number of people. Hence, it will give a better overview of the accessibility of resources for each person. As we go on, we must remember the verse from Galatians 2:10 “All they asked was that we should continue to remember the poor, the very thing I had been eager to do all along” (NIV).

In conclusion, each indicator has its own strengths and weaknesses. For that reason, there is no possibility of creating the “perfect” indicator that could measure everyone’s standard of living in a certain nation. GDP contributes to the quantitative measurement of a nation’s economic activity, while HDI measures the composite index of human development. The poverty indicator that I implied from the Bible considers the poverty side, specifically, in the people’s access to basic human resources. Those three indicators have the distinctive aspects that they cover. GDP as the overview indicator of a nation’s wealth, HDI as the composite index, and the poverty indicator as giving more depth to the poverty aspect. One common weakness that all three indicators have is the inability to present a number that could define all the feature that defines a person’s standard of living. The indicators do not measure the unequal distribution within the country. Nevertheless, there is no denying that each indicator contributes to their own point of view in the study of the economy, specifically macroeconomy, in a nation. In the end, we must always remember to care and protect for others, especially the poor, just as Jesus had come in the first place.  “Because of the oppression of the weak and the groaning of the needy, I will now arise, says the Lord, I will protect them from those who malign them” (NIV Psalm 12:5).