How and why we are moving beyond GDP as a measure of human progress January 13, 2017Posted by OromianEconomist in Uncategorized.
Tags: Development, economics, GDP
How we track our economy influences everything from government spending and taxes to home lending and business investment. In our series The Way We Measure, we’re taking a close look at economic indicators to better understand what’s going on.
Ever since 1944, Gross Domestic Product (GDP) has been a primary measure of economic growth. It’s in the news regularly and, even though few can define what it means, there is general acceptance that when GDP is growing, things are good.
There are problems with this simplistic formulation.
GDP measures production only. It does not capture collapsing fish stocks, increasing obesity and diabetes, or new types of synthetic drugs. When people choose to work part-time to have a better work-life balance, GDP actually goes down.
This narrow focus distorts our perception of progress. It guides our representatives to focus only on certain things – what is measured – and allows them to ignore what isn’t quantified and regularly reported.
But a new set of measures is slowly being established, which aims to capture a wider range of human experiences and reset our idea of “success”. Called the UN Sustainable Development Goals (SDGs), these aim to include all the main pillars of a progressive society, from physical safety through to economic opportunity and good health.
SDGs will force action by highlighting what is currently covered up by the narrow measures of how our economy and society are faring.