GDP has been an "unreliable compass" that has guided us into the current economic and environmental crisis
New, broader indicators of social progress are needed for a greener economy and more equal society, according to a leading report, which highlights the inability of Gross Domestic Product (GDP) to measure sustained well-being. […]
Statistical indicators, such as GDP, are important for developing and evaluating policies, but if they are flawed or unfit for purpose, then the wrong decisions could be made. GDP has come to act as a measure of political progress, which may not be appropriate when it was only designed to measure a country’s production activity.[…]
GDP has been an “unreliable compass” that has guided us into the current economic and environmental crisis, with little regard for human well-being. There are many aspects of well-being, including environmental conditions (both current and future), individual income, health and education, which are missed by GDP and which the report suggests should be measured. GDP is a reasonable measure of overall production activity, but is unsuitable for measuring “economic well-being”, i.e. it does not consider real household income or consumption, which are important indicators of living standards. However, although these indicate current well-being, they could be at the expense of future well-being, in that over-consumption depletes resources and increases global warming.
Sustainability is far more complex to measure than current well-being because it involves making many assumptions and choices about an uncertain future. One way of measuring sustainability would be to introduce a range of indicators which reflect the many different types of a country’s “stocks”, such as natural resources, greenhouse gas emissions, technological capacity and social capital (for example, citizens’ political and community involvement).
Comprehensive “balance sheets” of a country’s stocks can express what can be carried over into the future or how close a country is to environmental problems. Such balance sheets are not a new idea, but they are not widely used or promoted. Stocks could be measured in physical quantities or translated into a common monetary equivalent. However, the report warns that there are limitations to the monetary approach, for example, it is very difficult to calculate future market values for many stocks. The many dimensions of well-being have knock-on effects for each other and their connections need to be carefully considered when designing indicators. Although it is recommended that they are measured individually, there also needs to be a way of combining them into a single summary measure, as per the UN’s Human Development Index.
In order to gain and to hold the esteem of men it is not sufficient merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence. And not only does the evidence of wealth serve to impress one's importance on others and to keep their sense of importance alive and alert but it is scarcely less use in building up and preserving one's self-complacency.… Abstention from labor is the conventional evidence of wealth and is therefore the conventional mark of social standing; and this insistence on the meritoriousness of wealth leads to a more strenuous insistence on leisure.[...] According to well-established laws of human nature, prescription presently seizes upon this conventional evidence of wealth and fixes it in men's habits of thoughts as something that is itself substantially meritorious and ennobling.
The earth is but one country and mankind its citizens.