In Search of an Alternative to GDP
In his recent New York Times Magazine piece (“The Rise and Fall of GDP,” May 10, 2010), Jon Gertner aptly navigates the divergent–and often competing–interests involved in the debate over GDP.
The several hundred indicators brought together by the State of the USA will be invaluable for exploring the multifaceted dimensions of societal wellbeing. Even so, it is critical to have a composite index as easy to understand as GDP that distills those dimensions into a recognizable barometer of human, as opposed to purely economic, progress. Political decision making, for better or worse, inherently relies on straightforward, easily grasped stand-ins for complex realities.
One example is the American Human Development Project’s composite index, which is based on median earnings, educational attainment and enrollment, and life expectancy. It provides a comprehensive measure of human development that enables critical analysis of how and why policies succeed or fail.
We can all agree that the GDP is a useful, albeit incomplete, tool for determining the health of an economy. But it’s time to look to new measures that assess the well-being of people.