How is leisure treated in the calculation of GDP of an economy? Does such a calculation imply that GDP is good measure of well-being? Why or why not?

What will be an ideal response?

The GDP accounts give an economy no credit for producing leisure. However, most people would agree that leisure is a key ingredient in human well-being. For example, in time-use surveys, people report that they are happiest when they are with friends socializing. Likewise, people report that they are the least happy when they are commuting to and from work. Of course, the goal in life is not to maximize your income by working every moment that you can. If that were our goal, nobody would ever retire or take a vacation. A more reasonable goal is to maximize human well-being. This is another example of optimization. GDP tells us how many material goods are being produced by an economy, but it does not tell us whether all of those material achievements are being used to optimize human happiness.