Another attack on GDP and more on happiness

In: Uncategorized

10 Mar 2007

Another attack on GDP as a measure of social welfare, this time in a paper (PDF) by Jeroen van den Bergh of the Tinbergen Institute in Rotterdam. He acknowledges that such attacks have a long tradition with previous critics including Simon Kuznets, John Kenneth Galbraith, Paul Samuelson, EJ Mishan, James Tobin and William Nordhaus, Fred Hirsch, Amartya Sen, Tibor Scitovsky, Herman Daly, Kenneth Arrow and Partha Dasgupta. However, as van den Bergh also recognises, GDP was never meant as a measure of welfare. It was designed as a measure of the output of goods and services in the economy.

The problem is that the attack on GDP is not simply a technical one. There may well be better ways to measure economic output and human welfare. However, most of the attacks are, at least implicitly, assaults on the benefits on economic growth. In fact, if anything, GDP underestimates the human welfare benefits that result from rising economic output.

Meanwhile, the prolific Andrew Oswald, professor of economics at the University of Warwick, continues his promotion of happiness at the expense of growth. He has co-authored a paper (PDF) linking hypertension and happiness – showing the two are correlated but neither is linked to economic growth. And he was also involved in another study (PDF) showing that people tend to become most miserable in middle age and then become happier again.

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