Tuesday, September 01, 2009

GDP to be replaced as a measure of well being

For a long time most of the people looked at GDP as the measure of well being of a country. This is misleading from at least 2 reasons in my opinion.
First, as the GDP measures what is produced inside a country it measures as positive output the work done by the firefighters after a fire, or the medication bought to cure an illness also contributes to the GDP. But the negative consequences of these events are not taken into account.
Secondly, we arrive at a state where the consumption is encouraged in order to increase the GDP. As we consume more, the GDP increases, people have jobs and everybody is happy. But the environment degradation (pollution and resource depletion) is not taken into account anywhere in this equation.

A number of organizations proposed alternative ways to measure "user satisfaction" and also the state of the environment so we can have a better picture of the real state of a particular region. See an example of such measures here.
The European Commission is heading in this direction too and it will investigate alternative ways to GDP of measuring the development of a country. I hope this trend will catch with other countries too, so the governments get rid of this obsession of increasing the GDP at any cost.
Post a Comment