Gross domestic product (GDP) is used to measure the amount of goods and services that a country produces divided by the population, to ascertain material prosperity.
But, many including UK Prime Minister David Cameron believe that this tells us about economic output, which is not the sum total of a country’s wellbeing. It does not tell us how a country is progressing against subjective measures such as relational connectivity or time spent in leisure.
Mr Cameron announced that his Government will spend £2 million developing broader indicators for social wellbeing. He has drawn from a consultation document, which identifies areas to be measured, such as “connections with relatives and friends,” “personal cultural activities” and “job satisfaction.”
There is no doubt that these things are important, measuring them numerically when they are inherently subjective, are very difficult.
This means the data can sometimes be misleading. If such subjective indicators become part of national accounts, then there is a risk that the desire to produce a good score on these measures could lead to ill-targeted government expenditure on programmes to lift a country’s score.
The problems with GDP will not be fixed by trying to measure other immeasurable things instead. We have to keep GDP in perspective. It is useful because it measures what is tangible and indicates one of the conditions that can lead to increased quality of life.
We should use it as a helpful indicator and value other aspects of life, rather than blindsiding GDP in place of other measures.
