One example is the govt policy to have people shoulder as much of the healthcare burden as possible. The cost of healthcare is driven by the rise in income of the richest folks. Because of the income gap, affordability decrease rapidly as we move down the rungs. Now the healthcare burden becomes heavy for these folks (they don’t have access to good treatment, preventive care) and that undermines their ability to work and sinks them down further.

Govt policies are putting some in a virtuous cycle and others in a vicious one. The end result will be very bad…

GDPW, or gross domestic product welfare

GDPW refers to the ultimate economic output that has been transformed into social welfare. Theoretically, the negative welfare value is subtracted from the positive welfare value to get the GDPW.

GDPW=现行GDP+正内部性生产福利价值-负内部性生产福利价值-负外部性经济福利价值=现行GDP+（非正规性生产价值+非市场性生产）—破坏性生产价值（非法生产价值）—补偿性生产价值（包括：补偿自然灾害型损失生产价值、补偿人为事故型损失生产价值、补偿正常损耗型损失生产价值等三个部分）—资源耗减价值-环境退化价

Since GDP is the ultimate monetary representation of gross product, GDPW can rely on the GDP data calculated by the United Nations System of National Accounts (UNSNA).

Positive welfare value refers to the factors that contribute to the progress of people’s livelihoods while the negative welfare includes all the factors that bring down the quality of life, such as drugs and pollution.

Unlike GDP, GDPW is consistent with the creation of welfare and focuses on the tangible wealth that goes to the welfare sector. Based on this reason, GDPW is a more scientific index to measure economic growth. GDPW measures the amount of welfare that human production has accumulated. It will effectively amend the flaws in the existing GDP accounting system.

GDP doesn’t reflect social welfare

According to a report published by the UNSNA in 1993, the current GDP measuring system is primarily centered on economic production. This system effectively reflects economic growth, but fails to represent the progress of social welfare. Therefore, this indicator has the potential to lead economic development astray. Cheng’s proposed GDPW is not going to revolutionize GDP – it is merely an amendment within the GDP framework, and the two indices are closely related.

Calculating GDPW is a complicated process that involves economics, accounting and environmental factors, and its methodology is not flawless.

GDPW calculation standard

The nature of GDPW is to amend and modify the existing GDP based on the creation of social welfare. Production is the prerequisite of welfare. To convert economic growth to welfare progress requires considerations of both internal and external economic factors.

The concept of scientific development requires attention not only to GDP growth but also to the improvement of the general public’s living standards. Therefore, the welfare accounting system represented by GDPW marks a new ideology that the ultimate purpose of economic development is to raise people’s happiness.