The difference between an intermediate good and a final good is that the final goods are what are included in GDP, while intermediate goods may be resold further down the line or used as part of other goods and services. A final good refers to the goods sold to the final consumer, and it already includes intermediate goods because those were used in the process of making the final goods. We should care about this because if we didn’t differentiate between intermediate goods and final good then we would count many of the same products twice, or we wouldn’t how to incorporate goods that firms are keeping for later use or sale into the GDP.
GDP is overall a good way to measure well-being because while it may not directly measure the things that make us “wholesome” in life, it does measure the economics of the nation and that is a huge factor in well-being. It’s been proven that countries where their citizens have higher incomes also have citizens who tend to be happier because they don’t need to worry about where their next meal is going to come from; they can focus on things like the quality of education for their children and better healthcare. One thing that is missing, however, is a measure in how content those people are to be working all those hours in order to afford that lifestyle. Leisure is an important part of human life that is really not reflected in any way within the GDP. Another important thing not measured is pollution. While in the 1970’s it may have been alright for companies to do what they have to in order to raise the GDP, things in 2020 have changed drastically and GDP does not account for the polluted air in the environment which brings the quality of life down.
While there are certainly benefits to different measurements such as GNH (Gross National Happiness), I believe the best way to measure well-being is not directly by asking the people how happy they are but by measuring the country’s economy. When people are asked how happy they are, it is very easy for them to lie and say they are very happy when they really aren’t, especially if they don’t want to make their country look bad. That hypothetical person who lied about their happiness may be having trouble affording healthcare or may not have enough money to enroll their children into a better school. In the GDP measurement, on the other hand, there is no lying. Everything is based on numbers which are factual, and whether that country is content based on those numbers is up the viewer’s interpretation. I believe the most accurate measurement of a country’s happiness would be achieved by measuring both GDP and GNH, and see if there is in fact a correlation.
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