1. Evaluating the Economy

2. Please Note
This curriculum material has been developed by the Canadian Centre for Policy Alternatives and is provided to support union, community, and non-profit organizations to undertake popular economics training.
Non-commercial use and reproduction, with appropriate citation, is authorized.
Commercial or professional use is prohibited without approval from the Canadian Centre for Policy Alternatives, Ottawa, Canada.
This material has been edited by the NYC Virtual Enterprises Office for educational purposes. Some of the original slides may have been removed and replaced with other slides.
© Canadian Centre for Policy Alternatives, 2009

3. Key Topics Covered Reviewing economics Evaluating the economy
Defining GDP
Labor measures
Education measures
Health measures
Personal well-being measures
Security measures
Environmental status measures
Financial well-being measures

4. What is Economics? Economics is a social science.
How we work, and what we do with the fruits of our labor.
Microeconomics: the study of individual firms & consumers.
Macroeconomics: how these players interact on a larger scale
Economics has never been value-free.
Economists don’t just describe the economy.
They have views about how it should function.
Economics is not static.
It evolves to reflect changes in the economy, and debates and conflicts over the economy.

5. The Purpose of the Economy: Meeting Human Needs
The “economy” is the sum total of human work.
Why do we work? Because we are living beings, and we must work to produce the things we need to stay alive.
The requirements of subsistence.
But we want more: a full, quality, enjoyable life.
We work to meet human needs.
An economy that does not meet human needs, is not doing its job very well.
There’s nothing more “fundamental” about an economy’s performance, than whether human needs are being met.

6. Evaluating the Economy
Evaluating economic performance depends on the criteria chosen (subjective)
Most common measure: Gross Domestic Product (GDP)
Evaluation should be broader than just “growing GDP”
Different individuals, communities, and classes will have different criteria

7. What is GDP? Gross domestic product (GDP): GDP growth: Real GDP:
The sum value of all the goods and services produced for money in the economy
Business sector: production by private companies for profit
Non-business sector: government and non-profit production
GDP growth:
The rate at which GDP increases each year
Real GDP:
The value of output adjusted for inflation
GDP per capita:
GDP divided by population
GDP per capita growth:
The rate at which GDP per capita increases each year

8. GDP: Use With Caution
GDP should not be used as the only measure of economic well-being or “progress”:
Does not include work that is not performed for money (eg. caring work in the home, volunteer work in the community)
Undervalues unpaid labor that impacts the economic environment
Does not consider the distribution of output (“average” per capita GDP says little about how most people live)
Does not consider whether output is useful or destructive (eg. child care vs. warfare)
GDP is relevant, but be careful how we use it.
Never assume higher GDP is automatically “good”

9. Labor Measures Unemployment rate: Labor participation rate:
Refers to the share of the labor force that is without work but available for and seeking employment.
Labor participation rate:
The percentage of the population that is economically active, that is those who are working or actively seeking work.

10. Education Measures Mean years of schooling: Adult literacy rate:
The average number of years of education received by people
Adult literacy rate:
Ratio of people ages 15 and older who can both read and write with an understanding of a short simple statement about their everyday life
Primary school enrollment ratio:
The ratio of children of official school age who are enrolled in school to the population of the corresponding official school age
Secondary school enrollment ratio:
Tertiary school enrollment ratio:
The ratio of total enrollment, regardless of age, to the population of the age group that officially corresponds to the level of education

11. Health Measures Life expectancy at birth: Infant mortality rate:
Indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life
Infant mortality rate:
The number of infants dying before reaching one year of age, per 1,000 live births in a given year
Public health care expenditure:
Government spending on the overall condition of someone’s complete physical, mental and social well-being as a proportion of total spending when also considering individual spending

12. Personal Well-Being Measures
Happy Planet Index:
Measures used: Life expectancy, ecological footprint, and life satisfaction
A summary measure of how well nations are doing at achieving long, happy, and sustainable lives.
Human Development Index:
Measures used: Life expectancy, education, gross national income (GNI) per capita
A summary measure of critical aspects of human life, which includes a long and healthy life, being knowledgeable, and having a decent standard of living.

13. Environmental Status Measures
Security Measures
Homicide rate:
The deliberate and unlawful killing of one person by another person. Measured as the amount of recorded homicides per 100,000 people
Environmental Status Measures
Total greenhouse gas emissions:
The amount of kilotons of carbon dioxide or an equivalent gas that is dispersed into the atmosphere

14. Financial Well-Being Measures
Gini coefficient (income inequality):
The unequal distribution of income in a nation as measured by the Gini Index.
Relative poverty levels:
The percentage of the population under the state or condition of having little or no money, goods, or means of support at the level deemed appropriate for a country by its authorities.
Level of homelessness:
The homeless population consists of those living in homeless shelters and those with improper housing accommodations such as slums and squatting in non-housing arrangements.

15. Questions to Consider when Evaluating the Economy
Prosperity: Do people have a good standard of living?
Security: Do people fear losing their jobs? Are people comfortable with their current economic condition?
Innovation: Do people find new ways to improve production of goods and services? Are they creative?
Choice: Do people have the ability to make major economic choices (careers, consumption)?
Equality: Are there large differences between the living standards and opportunities of different groups?
Sustainability: Does the economy continually degrade the natural environment?
Introduce the project