Beyond GDP: Measuring Real and Inclusive Prosperity through Income Transmission, Distribution, and Purchasing Power

GDP per capita measures aggregate output, not the material conditions experienced by typical individuals. Outputbased comparisons therefore fail systematically when income transmission is weak or distributional concentration is high, rendering averages unrepresentative of lived prosperity. To address this distortion, this paper introduces the Balanced Prosperity Index (BPI), a composite indicator that operationalizes material prosperity as the joint outcome of three structurally distinct dimensions: productive capacity (GDP per capita), income transmission (representative household purchasing power), and distributional inclusiveness.The BPI is distinguished by three features. First, it embeds an explicit income-transmission framework that treats aggregate output as a necessary but insufficient condition for prosperity. Second, it imposes axiomatic discipline(necessity, monotonicity, and bounded compensability) which constrains admissible index designs and prevents dominance by any single dimension. Third, it defines an index family rather than a single specification, enabling robustness analysis within a conceptually coherent design space.Methodologically, all normalization, weighting, and aggregation choices are pre-specified ex ante, and robustness is evaluated across admissible variants rather than optimized post hoc. An empirical application to 32 advanced economies demonstrates that BPI rankings diverge systematically from GDP orderings in ways consistent with cross-country differences in income transmission efficiency and distributional structure.The contribution is a disciplined measurement framework that corrects a specific and pervasive distortion in comparative prosperity assessment, the conflation of aggregate output with typical living standards, while preserving economic interpretability and avoiding the conceptual overreach of multidimensional welfare indices.