19 May 2010

The New York Times critiques the GDP

That the GDP is not only a poor but a highly deceptive measure of the health of a society is hardly new. In fact the inventor of the GDP, Simon Kuznets, was worried from the start that it might lead to a nation’s economic activity being mistaken for its citizens’ overall well-being. And that of course is exactly what has happened, with nations' health now commonly being considered solely in terms of their GDP. Despite a variety of critics, this misguided practice has persisted. Economists like numbers, the media likes things simple, and the GDP is a relatively straightforward way of describing countries with a number, so it prevails.

Opposition has been growing, however, with more comprehensive and meaningful yardsticks presenting themselves, such as the Canadian Index of Well-Being. This, and many more indexes are mentioned in a very thorough article in the New York Times. The article provides an excellent overview of the GDP, its history, its strengths and weaknesses, and its challengers. It is well worth a read.

Perhaps most importantly, when the debate reaches the level of the Times, the possibility of replacing this over-used index as a measure of societal health greatly improves. And better ways of measuring the health of society should lead to improvement in the health itself.

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