---
type: faq
question: 'What is the best way to measure economic growth? '
topic: economic-growth
topic_title: Economic Growth
topic_url: 'https://liberty-lighthouse.vercel.app/topics/economic-growth/'
canonical_url: >-
  https://liberty-lighthouse.vercel.app/topics/economic-growth/faq/what-is-the-best-way-to-measure-economic-growth/
markdown_url: >-
  https://liberty-lighthouse.vercel.app/topics/economic-growth/faq/what-is-the-best-way-to-measure-economic-growth.md
---
# What is the best way to measure economic growth? 

When we care about progress, we care about children surviving past the age of five, whether a young person from a small town in Bihar can get a decent education, or whether a farmer in Vidarbha can see a doctor when he falls sick. But measuring all these things comprehensively and simultaneously is both expensive and methodologically complicated. People's lives are shaped by dozens of factors at once — income, health, education, safety, and opportunity, among others. Hence, if we want to track whether India is improving, we need a measure that reliably moves with everything else we care about — one that rises when lives improve and stays low when they don't. This is the problem that [GDP per capita](https://ourworldindata.org/grapher/gdp-per-capita-worldbank) solves surprisingly well.

GDP per capita is simply a country's total GDP divided by its population — the average value of goods and services produced per person in a year. At first glance, it appears to be a narrow measure of income. But the data tells a more interesting story.

In a 2022 paper titled ["Economic growth is enough and only economic growth is enough,"](https://lantpritchett.org/wp-content/uploads/2022/05/Basics-legatum-paper_short.pdf) economist Lant Pritchett shows that GDP per capita has two striking properties when compared against any measure of basic human wellbeing — whether [health](https://ourworldindata.org/grapher/healthcare-expenditure-vs-gdp), [education](https://ourworldindata.org/grapher/learning-outcomes-vs-gdp-per-capita), [nutrition](https://ourworldindata.org/grapher/daily-per-capita-supply-of-calories-vs-gdp-per-capita), or [sanitation](https://ourworldindata.org/grapher/death-rates-from-pneumonia-and-other-lower-respiratory-infections-vs-gdp-per-capita). First, it is empirically sufficient: no country in the world has achieved high GDP per capita while leaving its people with poor [basic wellbeing](https://ourworldindata.org/grapher/gdp-vs-happiness?country=IND~NGA~RUS~BRA~USA~AUS). Second, it is empirically necessary: no country has achieved good basic wellbeing while remaining poor. So, while the GDP per capita number may seem to measure only income, it is the single most reliable indicator of progress across every dimension that matters.

This happens because a growing economy generates the resources that enable better health, education, and infrastructure. A family that earns more can keep children in school longer. A profitable business can afford safer working conditions. Growth does not guarantee these outcomes, but it provides the resources that make these things possible. This is why, when economists want a single number to track whether a country is developing, they reach for GDP per capita. Not because it measures everything, but because it tracks what tends to drive everything else.