GDP & Quality of Life

Instructor: Artem Cheprasov
This lesson is going to define GDP, intangible assets, and Index of Well-Being. Then, you'll learn how GDP and intangible assets are connected, and why an Index of Well-Being may be superior to GDP in measuring quality of life.


GDP, or Gross Domestic Product, is a way of assessing various economic contributors in order to measure how well an economy is doing. Put another way, GDP represents the total of all the goods and services a country produces.

In this lesson, we describe how intangibles fit into GDP, and how GDP contrasts with the Index of Well-Being.

Intangibles & GDP

Intangibles are assets that do not have a physical, nor in some cases, clearly ascribable financial nature to them. Intangible assets have sometimes been termed intellectual capital, intellectual assets, or knowledge assets.

Examples of intangible assets include, but are certainly not limited to:

  • Research and development
  • Software and databases
  • Copyrights
  • Trademarks
  • Brand equity
  • Organizational know-how
  • Blog articles

It is only recently that intangible assets have been included as part of GDP. The U.S. Bureau of Economic Analysis (BEA) has decided that the following intangible assets will be counted as contributing factors:

  • Software (included since 1999).
  • Expenditures for research and development (included since 2013).
  • Entertainment, literary, and artistic originals, such as movies (also included starting in 2013).

With respect to calculating GDP, the BEA considers the aforementioned as investments or long-lived assets (much like the building of a factory) rather than just business expenses.

Index of Well-Being

Even while the GDP has been expanded to include intangible assets, there has been a growing sentiment that the GDP isn't a very good way to measure quality of life. This is where the idea of an Index of Well-Being enters the conversation.

An Index of Well-Being is a concept proposed by researchers, government agencies such as the EPA, and some universities to measure and track the changes in various categories related to the quality of life of a region, state, or nation. These categories and components, depending on the index's developer, may include:

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