GDP Imprecise Measure of Economic Growth
❑ Searching for a Better Wealth Meaasure Than GDP (TIME, 09/16/2009)
“An assortment of economists, psychologists and sociologists are beginning to say that GDP is an imprecise measurement of economic performance that distracts policymakers from more important measures of societal well-being,” the TIME report says.
On Sept. 14, the Commission on the Measurement of Economic Performance and Social Progress, a 24-person panel chaired by Nobel Prize-winning economists Joseph Stiglitz and Amartya Sen, released a report on behalf of the French government calling for governments to form new measurements of economic vitality that account for factors other than growth.
The report provides some suggestions, including: (1) looking at household income and wealth rather than national production to avoid the false boost that debt-fueled consumer spending gives to GDP; (2) taking into account nonmarket activities such as raising children, caring for the elderly, and housecleaning, as well as environmental sustainability; and (3) pay attention to “soft” economic indicators that are linked to well-being, such as access to education, population health, and leisure time.
Rather than proposing a single GDP substitute, the panel suggests that countries publish an annual report that includes a range of measurements of well-being.
This sounds a great topic for class discussions for our students, especially MPPs interested in international development on those in our new Master of Development Practice (MDP) program.