Moving Beyond GDP
GDP measures the total monetary value of goods and services pro-
duced within our national borders in a given period. GDP has become synonymous with the broader welfare
and progress of society, and our entire economic policy framework and
economic debate have come to revolve around the goal of maximizing the
growth rate of GDP. From promoting credit-fueled consumerism, to sub-
sidies for sprawl and deforestation, to deregulating capital and financial
flows, to the relentless pursuit of cheap, dirty energy with high environ-
mental costs, GDP growth has become the unchallenged standard and
guiding idea in most of our policy-making, politics, and public debate about economic development.
Earlier this month, a group of economists gathered at the annual meeting of the American Economic Association to discuss the U.S. Bureau of Economic Analysis, which for over 75 years, has been tracking GDP, or Gross Domestic Product. GDP is the total monetary value of all the goods and services produced by a country within a given period of time.
One of the panelists was the Nobel Prize-winning Princeton economist Angus Deaton, who has spent the last few years researching the rising numbers of “deaths of despair,” which is when struggling people die from self-inflicted causes, like suicide and drug overdoses. “Life expectancy has fallen for three years in a row,” Deaton said. “One of the major drivers of that is the opioid epidemic, which has so far killed over 200,000 Americans.” Pharmaceutical companies, he said, have made billions off this epidemic. “We’ve got a system that’s really killing people—and we’re counting that money as part of GDP. That’s gotta be crazy.”
According to co-chairs of the OECD-hosted High Level Expert Group on the Measurement of Economic Performance and Social Progress, Joseph E. Stiglitz, Jean-Paul Fitoussi and Martine Durand, show how over-reliance on GDP as the yardstick of economic performance misled policy makers who did not see the crisis coming. When the crisis did hit, concentrating on the wrong indicators meant that governments made inadequate policy choices, with severe and long-lasting consequences for many people. While GDP is the most well-known, and most powerful economic indicator, it can’t tell us everything we need to know about the health of countries and societies. In fact, it can’t even tell us everything we need to know about economic performance. We need to develop dashboards of indicators that reveal who is benefitting from growth, whether that growth is environmentally sustainable, how people feel about their lives, what factors contribute to an individual’s or a country’s success. Advancing Research on Well-being Metrics Beyond GDP, presents the latest findings from leading economists and statisticians on selected issues within the broader agenda on defining and measuring well-being.