25 Mark Essay Technique - GDP and the Standard of Living
Summary
TLDRThis educational video script guides students on crafting a compelling essay on the relationship between GDP per capita and living standards. It emphasizes the importance of not solely focusing on GDP per capita, introducing the 'Pecan Pie' method for essay writing. The script discusses the significance of GDP per capita in reducing poverty and funding public services, while also highlighting its limitations, such as overlooking inequality and not reflecting non-economic aspects of well-being. The video suggests considering alternatives like median household income for a more comprehensive measure of living standards.
Takeaways
- 📊 The video discusses the importance of GDP per capita as a baseline measure for living standards, adjusted for purchasing power parity (PPP).
- 📈 It emphasizes that increasing GDP per capita is crucial for reducing extreme poverty and achieving development goals, using China's economic progress as an example.
- 🔍 The video highlights the potential pitfalls of focusing solely on GDP per capita, such as overlooking issues like relative poverty, inequality, and social cohesion.
- 🌐 It points out that higher GDP per capita can enable more people to afford life-sustaining goods and services, and reduce long-term costs associated with malnutrition.
- 💼 The script introduces the 'pecan pie' approach to essay writing, which involves making a point, explaining it, contextualizing it, and then evaluating it.
- 📉 The video critiques the use of GDP per capita as an exclusive indicator of living standards, noting its limitations in reflecting real living standards and the need for broader economic and social well-being measures.
- 🏛️ It mentions the Howard-Dalton model of growth to explain the role of savings and investment in economic growth, and how increased GDP per capita can influence this.
- 💡 The video suggests considering median real disposable incomes and other indicators like the Genuine Progress Indicator (GPI) and Human Development Index (HDI) for a more comprehensive view of living standards.
- 🌟 It concludes by advocating for a focus on the middle of the income distribution and median household income as a more accurate measure of living standards than GDP per capita.
- 📚 The script is part of a series aimed at helping students structure and build good answers to essay questions, particularly for exams.
Q & A
What is the main topic of the video script?
-The main topic of the video script is the discussion of whether countries should focus solely on raising GDP per capita to improve living standards.
What is the key word in the essay question according to the script?
-The key word in the essay question is 'solely', which emphasizes the extent to which GDP per capita should be the focus.
What is the PECAN PIE approach mentioned in the script?
-The PECAN PIE approach is a method for writing essays that involves making a point, explaining it briefly, building contextualized analysis, and then evaluating that point.
Why is GDP per capita considered a baseline measure for living standards?
-GDP per capita is considered a baseline measure for living standards because it measures the inflation-adjusted value of goods and services produced within a country over a year, adjusted for purchasing power parity to account for cost of living variations between countries.
What is the significance of China's progress in improving material living standards as mentioned in the script?
-China's progress is significant as it exemplifies how increasing GDP per capita can lift a country from low to upper-middle-income status, reduce extreme poverty, and achieve development goals.
What are the potential downsides of focusing solely on GDP per capita as an indicator of living standards?
-Focusing solely on GDP per capita might lead to the neglect of relative poverty, inequality, and other social issues, as well as overlooking non-economic aspects of well-being.
How does the script suggest that GDP per capita can contribute to human development?
-The script suggests that higher GDP per capita can lead to increased consumption, job creation, higher tax revenues for public services, and potentially the development of a welfare state, all of which contribute to human development.
What is the role of the Howah Dermah model of growth in the script's discussion?
-The Howah Dermah model of growth is used in the script to emphasize the importance of savings funding investment, which in turn can grow a country's capital stock and support further increases in real GDP and incomes.
Why might increased GDP per capita not necessarily lead to increased investment, according to the script?
-The script suggests that increased GDP per capita might not lead to increased investment if financial institutions are inefficient at allocating capital to productive uses, or if gains from rising incomes lead to capital flight rather than domestic investment.
What alternative indicators are mentioned in the script to complement or improve upon GDP per capita?
-The script mentions the Genuine Progress Indicator (GPI), which accounts for environmental costs and benefits, and the Human Development Index (HDI), which is adjusted for gender and income inequality, as alternative indicators to complement or improve upon GDP per capita.
What is the final recommendation made in the script regarding the focus on living standards?
-The final recommendation in the script is to focus on progress in the middle of the income distribution and to consider median household income as a main measure of living standards instead of GDP per capita.
Outlines
📈 Introduction to Essay Planning on Living Standards
The paragraph introduces an essay planning series focusing on structuring answers to exam questions about living standards. It presents a specific question about whether countries should focus solely on raising GDP per capita to improve living standards. The speaker emphasizes the word 'solely' as key and suggests not rushing to a conclusion, instead advocating for a methodical approach known as the 'Pecan Pie' method. This method involves making a point, explaining it briefly, providing contextualized analysis, and then evaluating that point. The speaker proposes starting with a clear introduction defining GDP per capita as a baseline measure of living standards, adjusted for purchasing power parity to account for cost of living variations between countries.
🌏 The Importance and Limitations of GDP Per Capita
This paragraph delves into the significance of GDP per capita in reducing extreme poverty, using China's economic progress as a case study. It highlights how China's GDP per capita relative to the United States has significantly increased, lifting the country out of poverty and achieving development goals. However, the paragraph also points out the potential pitfalls of focusing solely on GDP per capita, such as increased inequality, using China's rising Gini coefficient as evidence. The speaker suggests using a Lorenz curve diagram to visually support the argument about the relationship between economic growth and inequality.
💼 The Role of GDP in Human Development and Economic Growth
The speaker discusses how an increase in GDP per capita can lead to higher consumption, job creation, and ultimately, higher tax revenues for public services. The paragraph introduces the concept of a chain of reasoning to demonstrate the flow of income from individuals to the government. However, it also evaluates this argument by presenting examples where high GDP per capita does not necessarily translate into improved human development, such as Equatorial Guinea and Qatar. The paragraph concludes by discussing the Howard-Dalton model of growth, which emphasizes the role of savings and investment in economic growth, and the potential issues with financial institutions' efficiency in channeling savings into productive investments.
📉 Critiquing GDP as the Sole Measure of Well-being
In this paragraph, the speaker argues that GDP per capita is an inadequate measure of human well-being and suggests focusing on median real disposable incomes instead. They critique GDP for potentially overlooking the shadow economy, the value of unpaid work, and the negative impacts of longer working hours on quality of life. The paragraph also addresses the issue of GDP increasing due to defensive spending, such as on insurance or pollution cleanup, which does not necessarily contribute to welfare. The speaker suggests looking at alternative indicators like the Genuine Progress Indicator (GPI), the Human Development Index (HDI), and the emphasis on years of healthy life expectancy over just life expectancy. The paragraph concludes by advocating for a multidimensional approach to measuring well-being that goes beyond material welfare.
📚 Conclusion and Final Thoughts on Essay Planning
The final paragraph summarizes the essay planning approach, emphasizing the importance of not solely relying on GDP per capita as a measure of living standards. The speaker suggests using median household income as a more accurate indicator and references the Legatum Institute's Prosperity Index and Bhutan's Gross National Happiness Index as examples of alternative measures. The paragraph reinforces the multidimensional nature of well-being and encourages focusing on progress in the middle of the income distribution. It concludes by encouraging students to continue exploring essay planning and to check the YouTube channel for more resources.
Mindmap
Keywords
💡Living Standards
💡GDP Per Capita
💡Purchasing Power Parity (PPP)
💡Extreme Poverty
💡Inequality
💡Human Development Index (HDI)
💡Contextualized Analysis
💡PECAN PIE Approach
💡Genuine Progress Indicator (GPI)
💡Median Income
💡National Capital
Highlights
Introduction to the essay plan series focusing on structuring answers to 25 mark questions.
Topic discussed: Living standards and the role of GDP per capita.
Emphasis on the keyword 'solely' in the essay question.
Explanation of GDP per capita as a baseline measure for living standards.
Introduction to the PECAN PIE approach for essay writing.
First point: Importance of increasing GDP per capita for basic living standards.
Example of China's progress in improving material living standards.
Evaluation of the potential neglect of inequality when focusing solely on GDP per capita.
Second point: GDP per capita allows more people to afford life-sustaining goods.
Critique of relying solely on GDP per capita for human development improvements.
Third point: High GDP can raise private savings and investment for future economic growth.
Evaluation of the efficiency of financial institutions in allocating capital.
Fourth point: GDP per capita is an inaccurate indicator of living standards.
Discussion on the flaws of GDP as an indicator and potential adjustments.
Final reasoning comment advocating for a multi-dimensional approach to well-being.
Conclusion favoring median household income as a better measure of living standards.
Encouragement to check the YouTube channel for more essay plans and exam preparation.
Transcripts
hi there and welcome to another in our
series of uh essay plans taking key
topics available
and thinking about how we would
structure
and build a good answer to a 25 mark
question
here's the topic today this is living
standards and the question is an
interesting one to raise standards of
living countries should focus solely on
raising gdp per capita to what extent do
you agree
keep in mind here of course that there
is always an evaluation hook
and i think the key word in this
question is going to be solely
and obviously you don't need to come to
a calibrated
reasoned justified conclusion at the end
and we'll do that in a few minutes once
we've focused on the
the approach that we favor here the
pecan pie approach to writing a 25 mark
essay question
so here's the question again to any
standard of living the country should
focus solely on raising
gdp per capita to an extent to agree
always good to make a very clear
introduction to the essay so i would
start by eliminating any waffle just
saying that the baseline measure for
living standards is real national income
real gdp capital adjusted for purchasing
power party
give a quick definition this measures
the inflation adjusted value goods and
services produced within the country
over a year measured in ppp adjusted
terms that takes tries to take into
account variations in the cost of living
between countries so gdp per capita is
your baseline measure
and then we're going to build uh four
peak and pi points so peak and pi
stands for point explained a brief very
brief explanation of the point you're
making let's start the paragraph then
you build contextualized analysis to go
with it
and then you try to evaluate that point
at the point included in the evaluation
and you keep doing this okay so you make
a point contextualized analysis
then evaluate and go back and do the
same again
let's see how this works first point is
that success
in increasing gdp per capita is
important for basic living stance
because it's a direct way of cutting
extreme poverty and of course the world
bank's preferred measure of poverty
extreme poverty is one dollar
90 a day ppp
then build the contextualized analysis
the analysis i'm going to build uses the
example of china
this is best exemplified by the progress
that china has made in improving
material living samples over the last
two decades or more
and depends how much data you have to
support your argument but i'm going to
use gdp per capita relatives united
states in china has gone up from just
five percent of u.s levels in 1992 to 25
percent in 2016. china's achieved upper
middle income status
uh and the world bank estimates that
chinese income capital rose from less
than a thousand dollars per capita in
1990
to just over 14 000 in 2015 and it was a
huge increase
china reached all of the millennium
development goals by 2015 and the
country is now lacking 90th
of 188 188 countries in hgi
here are building the argument that gdp
per capita is important because it lifts
people out of poverty
and helps to achieve
development goals
however
evaluation point however focusing
solely on gdp capital may cause us to
ignore
increasing relative poverty inequality
and i'm going to add in some data there
in china the genie coefficient which in
the index which is
0.3 in the 1980s to 0.53 2013. it's
coming down now but from a higher level
this is a big risk to social cohesion
and i'm also developing this evaluation
point
but also big gender and regional
inequalities particularly if you
understand your chinese economy between
coastal and interior
areas
so what's the point here
gdp per capita lifting it is important
to reduce extreme poverty
but we may be ignoring
inequality if we just focus on per
capita incomes
this might be in a moment to put in an
analysis diagram
to support your argument and the obvious
one to use will be a lens curve diagram
perhaps showing an outward shift of a
curve from relatively low inequality in
orange here to a much higher level of
inequality in green
make sure you practice these diagrams
well ahead of the exam so you can draw
them accurately and quickly at the same
time fully labeled
to make the point
now we go back to our second
peaking point
my second argument and by the way i'm
doing here i'm developing three points
for saying that gdp per capita is
important
in lifting living talents a rising real
gdp per capita is important as it allows
more people to afford life sustaining
goods such as health education
and it lowers the long-term costs of
malnutrition which we've been following
debates recently from world bank reports
you'll know is a
just an enormous cost on
growth and development in the long term
increasing gdp capital is key to
sustaining gains in human development
one chain of reasoning is that now this
is interesting focusing so one chain of
reasoning is that is signposting to the
examiner that you're going to build for
them a chain of who's in it there we go
higher capital incomes needs to increase
consumption which then helps to create
new jobs
thus providing a flow of factor incomes
for people in work
and if more people are earning regular
wages and higher incomes this will then
contribute to rising tax revenues for
government to pay for public services
including basic public american goods it
also allows the state to provide welfare
so
hopefully you can see the chain of
reasoning there that
higher per capita incomes is important
in giving
people
the incomes the factor incomes the
regular income from work
which flows and feeds through to the
government to help them fund basic
public americans
and perhaps the embryonic stages of a
welfare state
however evaluation
improved gdp capital does not guarantee
signs of improvements in human
development and then i'm taking a couple
of examples here equatorial guinea has a
capital income of over twenty thousand
dollars per head
but an hr ranking 138 well below that of
china for example
although the captain can be seven
thousand dollars higher it's a country
riddled with corruption and conflict
qatar is the richest country on the
planet
he per capita gdp but lies only 38th on
the hgi index that kind of contextual
awareness is gold dust
for an exam hopefully many of you will
have it
here's the data
this data is one of my favorite
tables it shows the countries
whose hgi outcome is actually
significantly below
their gni per capita ranking
equatorial gain it was mentioned by
answer
their general capital income is 79
places
higher than the hgive in other words uh
they're not necessarily translating the
high income ahead
into
durable sustainable improvements and
development across the population
kuwait kuwait kapon uae etc good
examples there
to include south africa is another good
example of course in part because of the
the deep inequalities
my third point again i'm building three
points for here saying that gdp capital
is important
third justification to focus on high gdp
is that it can raise the level of
private savings and investment which is
important for future
economic growth now we need to justify
this i need to analyze it
and to do so i'm going to bring in the
howa dermal model of growth
the howard derma model emphasizes the
role of savings to help fund investment
in many lower and middle income
countries gross national savings
insufficient to fund investment so if
policies are successful in lifting gdp
per capita
then an increase in savings leads to an
expansion that's investment
which helps to grow a country's capital
stock and then i'm building the virtual
circle idea the extra investment helps
hopefully to increase real gdp which
supports further increases in incomes
and consumption i'm not putting
necessarily any data in but i mentioned
in two countries here in indonesia both
have
a high level of saving investment as per
capital incomes
lies
but of course i need to evaluate
one problem with this argument that's by
the way that's a neat evaluative phrase
one problem with this argument is
that in many countries financial
institutions bank stock exchanges etc
are not efficient
at allocating capital to productive uses
and many of the gains from rising
incomes actually don't flow to
investment they referred to elites who
may send their money out of a country
capital flight rather than retain it for
domestic investment
so an increase in per capita incomes
does not necessarily
drive investment going forward
investment in productive users
now what i've done so far in this essay
is i've built three points which say
that per capita income
is important for living standards
hopefully using some good analysis there
but i've also evaluated and said
actually though there are three
negative the three downsides of this of
those arguments
my fourth point actually is just to
twist it slightly and say actually no
government should not
focus solely on genome biblical capital
because
this is something that many students
will be familiar with it is an
inaccurate indicator
of changes in
the standard of living
and then again this provides you an
opportunity to build quite a flowing
paragraph which might put together two
or three points
relevant to the inaccuracy or the
or the the um the way which gdp is not
necessarily a an appropriate kind of
living standard
firstly the capital gdp understates real
living standards it tends to underset it
due to the shadow economy the value of
unpaid work by volunteers people caring
for their families in fact
were we to include when some countries
now do these these imputed estimates
from the value of home care for example
gdp capital will be much higher
higher per capita incomes however might
also have come from longer working hours
which
negatively affects quality of life so
gdp capital perhaps overstates
living standards gdp ahead also
increases when we spend money
defensively protecting against crime
insurance for example cleaning up the
effects of pollution and waste actually
adds to gdp doesn't add to our welfare
and there are also big difficulties in
accurately measuring the true value of
welfare that we derive from consuming
products for example for free on the
internet youtube videos
facebook connections snapchats stories
etc many economists now see gdp
as deeply flawed so i'm trying to build
a point here for saying
hang on a minute we can't rely
solely on gdp
because actually gdp as an indicator
itself is uh is inherently flawed
however we don't have to evaluate that
point
we can and many economists do
make adjustments to gdp to take into
account these
criticisms for example and it depends on
which other indicators you've looked at
in your lessons
but the genuine progress indicator gpi
are just for environmental costs and
benefits and surveys of all sorts of
people people's measured happiness and
well-being
hdi data for most countries is now
adjusted to take into account gender and
income inequality
instead of looking at
years of life expectancy for example we
might focus on years of healthy life
expectancy instead of just looking at
years of expected and mean years of
schooling we might look at quality of
education outcomes in terms of
basic literacy of functional literacy
for example so there are ways in which
we can take we can recognize the flaws
in gdp
but also perhaps move the debate on a
little bit
think about adjustments to improvements
to amendments to the national income
data that's not it's not impossible for
the lots of economists working in this
area
so in this essay we have focused on four
essentially four key arguments for each
we've contextualized the analysis but
then we've also tried to evaluate
the point so we've already had four
evaluation points
straight away and now we come to the
final recent comments
it's important in the
in the essay to come to a final reason
comment
some examples want you to look at costs
and benefits of something or short and
long-term perspectives it obviously
depends on what the question is
the example i teach looking for a
student to make a final comment which
hopefully says something
relatively fresh
rather than just goes over the same
ground again
but take advice from your teachers about
the best approach for your particular
example
here's my answer here's my final reason
comment it's a chunky paragraph but let
me take you through it and hopefully it
might be useful
overall i would argue that that's quite
a nice phrase to use to start your final
paragraph
overall i would argue that and then
you're going to justify your arguments
changes in gdp are an inadequate measure
of human well-being some economists
argue that we should now concentrate on
median real disposable incomes instead
of moving from gdp per capita
average measure let's move to median
incomes rather than income per capita
this allows us for example to consider
the hecks of taxation and inequality
the legatum institute is to prosperity
in this and the kingdom of bhutan as
many people know has for the last 40
years or more published an annual gross
national happiness index
gdp is an important indicator not just
because it reflects the positivity of an
economy we should not ignore it when
assessing the standard of living but and
here's my kind of
key point material welfare
it's not the same as economic and social
well-being from health to education
and
the sustainable stock of national
capital that we leave to our future
generations well-being is a
multi-dimensional
idea that's a crucial point in my essay
that gdp alone
cannot measure
and then you come like again think about
the way in which you can bring an essay
to an
end come back to your main point so i
would favor focusing on progress in the
middle of the income distribution
and therefore i would replace gdp per
capita
with median household income as my main
measure that is sending quite a strong
message to the examiner i've settled on
a particular indicator as my if you like
my
guiding light for household living
standards
it may or may not be possible to get all
that data on medium housing but that's
what i want to use as my main measure so
i've come to quite a firm conclusion
okay
so that is my approach to this
particular question there's lots of
different approaches you can take but
hopefully it gives you a little feel and
a flavor for how we can use the pecan
pie
approach to answer these questions
there are lots of these essay plans now
on youtube we're going to be adding lots
more before the exams so keep checking
out our youtube channel subscribe and
hang around hopefully will be another
question along soon which will help you
in your
your progress towards the exams
cheers now take care see
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