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Beyond GDP: measuring what matters

GDP measures the wrong things, badly, and uses the wrong numbers to do it. A short tour of what economies could be measured by instead — and why it matters politically.

SJN Education Group

Gross Domestic Product is one of the strangest political objects of the twentieth century. Designed in the 1930s as a wartime planning tool, GDP became — over the following decades — the single number most cited in arguments about whether a society was doing well. Its inventor, Simon Kuznets, warned against this use. He was ignored.

What GDP fails to count

  • Unpaid care work — overwhelmingly performed by women — is not in GDP. A society where everyone outsources their parenting and elder care is, by GDP, richer than one that doesn't.

  • Environmental destruction adds to GDP. The oil spill, the cleanup, the lawsuit — all GDP-positive.

  • Inequality is invisible. A society where everyone is comfortable can have the same GDP as one where most people are precarious and a few are billionaires.

  • The distribution of growth is unmeasured. If GDP grew 3% last year and all of it went to the top 1%, the headline still reads "growth of 3%".

Alternatives, and where they're used

Wales has a Future Generations Commissioner. New Zealand has wellbeing budgets. The OECD publishes Better Life indicators across 11 dimensions. Bhutan famously measures gross national happiness, however imperfectly. None of these are perfect. All of them are better, on their best days, than a single number that tells you how fast money changed hands.