Heavyweights slate GDP

An important article in the New York Times magazine on the debate about GDP as a measure of progress and well-being.

The rise and fall of GDP by Jon Gertner is based on interviews with many of the key players in the debate including several members of the recent Sarkozy commission on the issue: Joseph Stiglitz (Nobel laureate in economics), Amartya Sen (another Nobel laureate in economics and one of the creators of the United Nations’ Human Development Index), Daniel Kahneman (Nobel laureate and key figure in behavioural economics), Robert Putnam (Harvard author of the influential Bowling Alone study) and Enrico Giovannini (the head of the Italian national statistics agency and a key figure in the international movement to introduce new well-being indicators). The sole critical voice he quotes is William Nordhaus of Yale.

The article gives a useful overview about how several key countries are moving away from GDP as the main measure of progress:

• America. Evidently hidden on p562 of Barack Obama’s recent health care bill is a provision requiring congress to help finance the creation of a “key national indicators” system. Gertner argues this will essentially mean that an existing project on the State of the USA will become a national indicators panel run by the National Academy of Sciences.
• Canada. The Canadian Index of Wellbeing.
• Europe – Top officials in Britain, France and Germany have aligned themselves with the move to expand a focus on “well-being” rather than growth as a measure of progress.
• International organisations including the Organisation for Economic Cooperation and Development are working on alternative indicators of well-being. The Human Development Index from the United Nations Development Programme is about to reach its twentieth anniversary.

I have previously argued that the discussion of the deficiencies is essentially a sneaky attack on prosperity. There is nothing wrong with finding different measures of social progress – I often do it myself – but this is an attack on economic growth masquerading as a debate about measurement.

I intend to revisit this subject in more detail in the near future.