Why are unpaid services like housework or caring for family not counted in GDP, even if they are valuable?
Answer (2)
Unpaid services like housework, childcare, or running errands for your family are not counted in GDP because there is no money involved in the transaction. GDP only includes work that is paid and recorded in the economy. This means that even though these activities are very valuable in real life, they are invisible in GDP measurements.Let’s say your mother stays home to take care of the house, cook meals, and look after your younger siblings. She’s clearly doing a lot of work, and her efforts are valuable to the family—but because no money changes hands, it doesn’t show up in GDP. Now imagine hiring a nanny, a cook, and a cleaner to do the same tasks. That would cost a lot of money, and because that involves payment for services, it would be included in GDP.This shows one big limitation of GDP: it doesn’t count informal or unpaid work. This is especially important in countries like the Philippines where many people help their families in ways that are not part of the formal economy. For example, many Filipino teenagers help with farm work or family businesses without pay. All that effort helps the household but is not recorded in national income.In some Asian cultures, family care is a big part of life, but since it’s unpaid, it doesn't show up in GDP reports. This can give the impression that the economy is smaller or less productive than it really is, just because unpaid labor is ignored.So while GDP is useful, we need to understand that it doesn’t capture all valuable activities—especially those done out of love or responsibility, without money involved.
Unpaid services like housework or caring for family are not counted in GDP because GDP measures only the market value of goods and services that are bought and sold through formal economic transactions. Since these unpaid activities don’t involve a market exchange or a monetary transaction, they lack a clear market price, making it difficult to measure their value accurately within the GDP framework.In short,GDP captures only market transactions.Unpaid services don’t have a price tag or sale.Even if valuable, these activities happen outside formal markets.Therefore, they are excluded from GDP calculations.
