Limitations of GDP as a Measure of Economic Welfare:

Distribution of GDP:

- GDP measures the total market value of all goods and services produced within a country in a given period. However, it does not account for how this wealth is distributed among the population.

- The distribution of GDP among individuals or households is not uniform. There could be a situation where a country's GDP is increasing, but the benefits are only going to a small segment of the population, leading to widening income inequality.

- In cases where a significant portion of the GDP is concentrated in the hands of a few wealthy individuals or corporations, the overall economic welfare of the society may not accurately reflect the GDP growth. This could result in a situation where the majority of the population does not experience an improvement in their standard of living despite an increase in GDP.

- Furthermore, GDP does not take into account non-market transactions, such as household work or volunteer activities, which contribute to the overall well-being of a society but are not captured in GDP calculations.

- As a result, using GDP as the sole indicator of economic welfare can be misleading, as it fails to consider how the wealth generated is distributed among the population and does not provide a comprehensive picture of the overall economic well-being of a society.

In conclusion, while GDP is a useful measure of a country's economic output, it is important to consider its limitations, particularly in terms of distribution, when assessing the overall welfare of a society.