GDP per capita measures average income but fails to account for non-market activities, the value of leisure, environmental externalities, and, crucially, the distribution of income. While the provided answer selects option 4, it is important to note that all listed factors contribute to the limitation of GDP as a welfare metric. The exclusion of income inequality means that a rising GDP can mask declining living standards for the majority of the population.

The Genuine Progress Indicator (GPI) is a metric designed to replace or supplement GDP as a measure of economic welfare. It accounts for economic growth while subtracting costs associated with environmental degradation, resource depletion, and social inequality. It is conceptually synonymous with the Index of Sustainable Economic Welfare (ISEW), providing a more comprehensive view of a nation's well-being than traditional GDP figures.