Nobel-winning economist Joseph Stiglitz would like gross domestic product (GDP) to go the way of the pyramid inch and the Arabic mile. “The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy,” he writes. “Yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem.” He’s right! In the United States, GDP is on the upswing, yet Los Angeles burns regularly, and the U.S. president faces impeachment.
The problem, he says, is that politicians see positive GDP figures and continue with the status quo. GDP gives no hint of environmental degradation or resource depletion, nor inequality, middle-class suffering, or lower standards of living. “If growth is not sustainable because we are destroying the environment and using up scarce natural resources our statistics should warn us,” he says. “It is clear that something is fundamentally wrong with the way we assess economic performance and social performance.” Preach.
His new book, Measuring What Counts: The Global Movement for Well-Being, cowritten with French economists Jean-Paul Fitoussi and Martine Durand, provides a blueprint for how countries can use more appropriate metrics that account for details such as sustainability and—imagine!—how people feel about their lives.
This all began a decade ago, when Nicolas Sarkozy, then the president of France, asked Stiglitz and fellow Nobel winner Amartya Sen, along with Fitoussi, to set up a commission studying GDP. They published their early deliberations in a book called Mismeasuring Our Lives.
From an economist’s perspective, metrics are the key to everything. “If we measure the wrong thing, we will do the wrong thing,” writes Stiglitz.