We know that money buys freedom but we cannot simply maximise freedom by giving people more money. The only result would be inflation. Better is to maximise disposable income for everyone—net income minus essential spend on basic subsistence, housing and energy (rents that act as a drag on productive activity).
Increasing disposable income for the whole of society opens up choices—including ones that GDP cannot measure, for example to do more in the community or spend more time with the kids. Disposable income changes the focus towards productive economic activity rather than wealth extraction. Investment in housing, sustainable energy, and transport infrastructure provide the foundation for a freer society where we are enabled to pursue a productive life.
A second key ingredient in choosing the right metric is to use median measures rather than a crude average (or mean). To see the difference, imagine a football team where one player is earning one million pounds per week and the other ten earn one hundred. The average salary is close to half a million whereas the median income is only one hundred. If the pay of the star player is increased to two million then average income doubles while median incomes remains almost the same. By optimising median income we optimise the distribution such that everyone can be maximally economically active. The importance of using the median measure is discussed on Jonathan Andreas’ medianism blog.
If political-economy is to be of any use, it should not just try to understand the world but also try to improve it. Progress implies that something should be optimised. The GDP money-metric is a crude goal for life, better to maximise median disposable income, first by addressing the optimal distribution and second by provision of universal basic services (health, education, housing, and transport). By switching away from GDP to median disposable income we get closer to maximising freedom, and that matters.
However, given the way that real world economies work we find that higher GDP does translate through into higher median disposable incomes. Perhaps not at the margins, the 5 or 10% differences between two economies, but most certainly over time and relating to any large differences in GDP. Median disposable income is higher in 2017 Britain than 1950 Britain? In 2017 Britain that 2017 DRC Congo? GDP tracking that really quite well, even if not exactly.