French president Nicolas Sarkozy recently advocated that nations adopt new measures of economic and social well-being. He claimed the current global economic slump reveals that gross domestic product (GDP), the measure long favored by economists, is obsolete. Instead, countries should follow the recommendations of a new report titled “GDP and Beyond.” What is needed, says Sarkozy, is a way to measure happiness and well-being, along with traditional economic indicators.
The report, commissioned in 2008 by the French government, was authored in part by Joseph Stiglitz and Amartya Sen, both Nobel Prize-winning economists. It points out that many factors relevant to the overall well-being of a society are left out of the equation that gives us GDP. For example, quality-of-life issues such as high crime, environmental degradation, and traffic congestion are largely “missed” by GDP, which only measures goods and services produced in a country. A relatively high GDP, the report argues, doesn’t necessarily correspond with greater well-being.
The commission was given the task of analyzing the shortcomings of GDP and coming up with better measures of living standards. Stiglitz explained that attempts to maximize GDP can lead to international conflict, which is undesirable; whereas sometimes paying attention to the quality of life—improving access to health care, cutting pollution, and so on—would lower GDP growth. Stiglitz concluded, “Changes in society and the economy may have heightened the problems, at the same time that advances in economics and statistical techniques may have provided opportunities to improve our metrics.”
Related Links
- France Wants Happiness Included in Progress Measures
This article focuses on France’s call to adopt an alternative to GDP for measuring nations’ economic progress.(Source: VOA News, September 14, 2009) - Real Time Economics: Sarkozy Adds to Calls for GDP Alternative
This article includes a brief explanation by Nobel Prize-winning economist Joseph Stiglitz as to why an alternative measure to GDP is needed.(Source: Wall Street Journal, September 14, 2009) - Beyond GDP: Measuring Progress, True Wealth, and the Well-Being of Nations
This official Web site of the Beyond GDP Conference includes links to the full text (pdf) of the EU’s “roadmap” for improving indicators of economic and social progress, and multi-language videos of conference presentations.(Source: beyond-gdp.eu; accessed September 30, 2009) - Gross Domestic Product (GDP) and Alternative (Better) Economic and Social Indices for Our Times
This Web site includes links to various alternative measures and indices of economic and social progress.(Source: Investing for the Soul; accessed September 30, 2009)
Read Stiglitz book on FAIR TRADE..and you will learn real truths about real world trade and how inusjt that is and thats why there is so much poverty in the world..stop denying truth..free trade is NO FREE TRADE..better start thinking about a social capitalism society cause thats what you already got like it or not..and I am no socialist just in case .worst comunist just dont beleive in any ideology as dogma. I jjst think economic models depends on type of country, resources, people, etc.