[GDP] measures the value of goods and services produced by the residents of a country. But some of the income earned in Britain, say, is paid to non-residents, while residents receive income from abroad. Adding net income from abroad to GDP gives us gross national income GNI, also known as gross national product), which is more relevant for the prosperity of a nation.

Most countries' rank by GNI per head is similar to that by GDP. One exception is Ireland: its GDP per head is one of the highest in the OECD, but because of large net outflows of investment income, its GNI per head is merely around the OECD average. Its average GNI growth rate over the past decade has also been about one percentage point less than on a GDP basis.

Another flaw is that GDP makes no allowance for the depreciation of the capital stock. Subtracting this from GNI leaves net national income (NNI), which is probably the best national-account measure of welfare. Awkwardly, the numbers are harder to come by, making it difficult to compare across countries and over time.

A nation's well-being depends on many factors ignored by GDP, such as leisure time, income inequality and the quality of the environment. GDP was developed primarily as a planning tool to guide the huge production effort of the second world war. It was never intended to be the definitive yardstick of economic welfare.