Gross Domestic Product (GDP) has long been used as the primary indicator of a nation’s economic health, but it falls short in capturing the nuances of societal well-being and true prosperity. While it measures the value of transactions in an economy, GDP is ultimately an approximation, not a reflection of quality of life or happiness.
GDP grows when transactions increase, but not all transactions represent genuine progress. For instance, if a man divorces his wife and then pays her to cook and clean, GDP records this as an economic gain. Yet, the activities themselves—cooking and cleaning—haven’t changed, only their categorization as paid labor. This illustrates how GDP can misrepresent societal changes as economic improvements.
Furthermore, GDP fails to account for utility—what actually makes people happy or fulfilled. Imagine someone choosing to work half-time to spend their afternoons fishing, prioritizing leisure over income. While this decision might lower GDP, it could significantly increase their personal satisfaction and well-being. Such scenarios highlight the disconnection between economic output and individual happiness.
By focusing solely on financial transactions, GDP neglects other vital aspects of life, such as environmental health, social cohesion, and personal fulfillment. Such a wide measurement of individual desires is, of course, difficult. Difficult to the point that instead of having targets for what should happen, rather better is to wait, watch, and see what does happen. This spontaneity acknowledges the diversity of human preferences and the unpredictable ways people find fulfillment.
For a more holistic view of progress, we need metrics that emphasize well-being, sustainability, and equitable distribution of resources, rather than merely tracking the flow of money.
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How has Richard Murphy been able to access and post on the blog Tim??
For a more holistic view of progress, we need metrics that emphasize well-being, sustainability, and equitable distribution of resources, rather than merely tracking the flow of money.
Maybe an AI enhanced version but anything with the buzz word ‘Equity’ or its derivatives is automatically suspect due to the DIE implications. Equity is the theft of resources – pure and simple – by people who fee they merit special treatment on behalf of their race, gender or by other characteristic. It is a deeply suspect concept and hopefully Trump starts putting an end to it in the US.
For a more holistic view of progress, we need metrics that emphasize well-being, sustainability, and equitable distribution of resources, rather than merely tracking the flow of money.
No we don’t because those numbers are subjective and can be trivially weighted to produce any “result” the originator wishes. GDP has many problems but at least it’s a measure that can be objectively measured using simple arithmetic, so it has its uses.
The problem (as has been pointed out) being that the choice of things to measure rapidly becomes a political one, rather than an objective (but flawed) one.
Do we value time spent sitting idly by the side of a river fishing, or time engaged in ‘the arts’? If the latter, then which arts? Opera or punk rock?
We could go the other way and just generically ask people if they’re happy, but this is subject to the heavy hand of the media telling us the world is ending and we can do nothing about it, or that we’ve never had it so good. I’ve forgotten who we’re meant to be angry with today…
Or we could stop collecting the information at all, as ordained by Our Lord, John Cowperthwaite.
“GDP is ultimately … not a reflection of quality of life or happiness.”
Who has ever been dim enough to claim that it is?
If the wheeze is to include feelz in a measure of the country’s prosperity, then it’ll fail.
Everyone with any sense is pissed off with the state of the place so the new progressive measure will need to reflect that fact.
I was talking to a pal about tax. His son pays plenty of tax in the Netherlands but reports “at least we get something back for it”. His Dad interprets this to mean that NL is better governed than UK.
I remember years ago a late friend saying “They order these matters better in France” and then chuckling that for the first part of his life only a madman could have said such a thing.
Dearieme
Other than bin collection (and that under duress) I cannot think of anything that I get for paying more than half my income. I a. Surrounded by hostile invaders, discriminated against at every juncture on the grounds of my race, gender and background and taxes with an ROI of less than 0.1% – everything has deteriorated since the 1980s significantly. Your pal’s son has it correct. Most taxpayers of my age (40 to 50) receive almost nothing in return.
GDP is pretty crap even as an economic measure, but it has two great virtues: most countries calculate it in a fairly consistent way, so international comparisons are at least possible; and it’s readily available on a monthly basis – a better economic index that took three years to calculate would be useless as a guide to how an economy is performing now.
It’s still a stupid metric. The GDP of Brazil is higher than the GDP of Monte Carlo. Or Lichenstein.
And?
GDP per capita might make more sense. At least you are adjusting for size of population.
Otherwise, very big poor countries are better off than small very rich countries…Totally Upminster.
Finns are famous for not smiling a lot, yet they claim to be the happiest nation. The surveys are loaded with questions like “How satisfied are you with the free childcare system” which the respondent can rate from extremely satisfied to not at all satisfied, but like a golf score card there’s no space for comments like “I bloody well should be satisfied, I pay enough tax for it don’t I?”
Tim the Coder:
Yes, but everyone with anything usefull to contribute generally does speak in terms of per capita GDP, or equivalents. It’s only unserious politicians (Mr Trudeau, I’m looking at you) who try the total GDP legerdemain, whereby individual impoverishment is hidden by an increase in the number migrants.