For a More Meaningful Indicator of Well-Being than GDP

Giampiero Bordino 
Professor in Contemporary History and Political Analyst. President of the Einstein Center for International Studies

J.E. Stiglitz, J.-P. Fitoussi, M. Durand 
Beyond GDP. Measuring What Counts for Economic and Social Performance 
OECD-Publishing, Paris, 2018 
https://www.oecd-ilibrary.org/economics/beyond-gdp_9789264307292-en

The three authors, two distinguished economists and the head of statistics at the OECD, write in the last chapter of the book: "What we are arguing is that there is no real growth when GDP numbers rise but do not correspond to an improvement in the well-being of most citizens, do not reflect the damage to the environment or the exhaustion of natural resources, make the economy and individuals more insecure, erode trust in institutions and society, and open the way to conflict… We should not be misled by a number that does not capture all these dimensions.”

In these considerations, we find the general meaning of the report promoted and published by the OECD and carried out by a committee of high-level experts chaired by Stiglitz, Fitoussi and Durand. Back in 2009, Stiglitz and Fitoussi, together with the Indian economist and philosopher Amartya Sen, had already denounced in an initial report the radical inadequacy of GDP (the total value of goods and services produced in a country during a given period of time) as a measure of progress and well-being, and the political and social distortions caused by its use by states and the ruling classes, and had given indications for going "beyond GDP" with new and diverse methods of measurement. As Stiglitz observed, it is obvious and self-evident that "what you measure affects what you do".

If the measure is wrong, so are the resulting policies, with serious consequences (social malaise, inequality, conflict, damage to future generations, etc.) for populations and individuals.

In the new report published by the OECD, more than ten years later, it is evident that GDP, despite some changes, continues to be the fundamental indicator used by states and ruling classes. In spite of crises of various kinds (economic, social, environmental, health, etc.) that are increasingly evident and increasingly global, the "quantity" and not the "quality" of development is still essentially measured by GDP. We can observe, and this is true for any other relevant human phenomenon, that at the origin of this continuity over time there is an inextricable mixture of conscious and, so to speak, "cultivated" interests, which are opposed to the collection of new data and, above all, to new consequent policies, and, at the same time, unconscious stupidity (the typical capacity of men to harm themselves without even realising it) present in societies and, in particular, in the ruling classes that guide them. This is one of the reasons why, because of the complexity of the origins, it is so difficult to change.

What then should be measured, besides the sum of the value of goods and services produced, in order to move towards a qualitative and not only quantitative measurement of development? According to the authors, mainly income and wealth inequality, inequality of opportunity, economic insecurity, sustainability, social capital and trust. For each of these major areas, the authors propose detailed and technically well-argued analyses of the new measurements that would be needed, the data to be collected, the methods to collect and interpret them, and the new policies that would be needed and possible. A great deal of work therefore remains to be done, also on a technical and scientific level, to go "beyond GDP", but it is evident that the weight of interests, and of the public and private powers that hold and defend them, remains before all else.

This problem of going 'beyond GDP' is neither new nor recent but has a long history. This is demonstrated, to give just one significant example, by Robert Kennedy's famous speech to the students of Kansas University in October 1968, just three months before he was killed during the electoral campaign that would probably have led him to the presidency of the United States. An impassioned speech of extraordinary communicative force.

GDP, the American leader noted, "also includes air pollution and cigarette advertising, and ambulances to clear our highways of weekend bloodshed...it counts special locks on our front doors, and prisons for those who try to break them… it grows with the production of napalm, missiles, and nuclear warheads... It does not consider the health of our families, the quality of their education... It does not consider the justice of our courts, nor the fairness of our relationships with each other. It measures neither our wit nor our courage, neither our wisdom nor our knowledge, neither our compassion nor our devotion to our country. It measures everything, in short, except what makes life truly worth living”.

More than half a century after Kennedy, nothing has substantially changed from this standpoint, and "measuring what counts" has not even become a relevant topic of political debate.  The book by Stiglitz, Fitoussi and Durand may therefore represent a useful and appropriate informative instrument for those who, as politicians or simple citizens, would like to do so.

Translated by Grégoire Kinossian