Measurable Economic Welfare (MEW) is an alternative measure for living standards. It measures not only the total national output (GDP) but also includes the economic welfare of the country. This includes an assessment of the value of leisure time and the amount of unpaid work in an economy. MEW also includes the value of the environment damage caused by industrial production and consumption.
Comparing this measure to GDP, it is an instant reaction to all of us that this measure is better than GDP as it includes economic welfare. This is because including economic welfare would mean it could better measure the standard of living in the country. GDP is unable to measure the standard of living as it does not include economic welfare, like for example, working hours and working conditions. Added to this, it also takes in to account the value of environmental damage caused by industrial production and consumption, like for example pollution, which will further make the calculation of living standards accurate.
However, there is a problem to this measurement. Putting a monetary value to economic welfare like the value of leisure time and unpaid work is hard. How do you put a value to the amount of leisure time you have in a day? Furthermore, how do you calculate this when we take into account everyone in the country? Due to this difficulty, measuring MEW could be inaccurate as the original value placed is already inaccurate.
So is MEW a good measurement? In a way, it is much better than GDP as it takes into account economic welfare, however, putting in a monetary value to the economic welfare could be hard and inaccurate.
Stamford Economics 