Ditching the GDP: Report from Sarkozy/Stiglitz commission

The Commission on the Measurement of Economic Performance and Social Progress, a group initiated by French president Nicolas Sarkozy, has released a set of recommendations for a more sophisticated set of indicators to replace the concept of GDP (gross domestic product). Columbia economist Joseph Stiglitz is chair of the commission.

The draft of the report dated June 2, 2009, is available at this address.

In an article for The Guardian (see “The Great GDP Swindle,” Stiglitz emphasizes the need for a new regime for the measurement of economic progress:

If we have poor measures, what we strive to do (say, increase GDP) may actually contribute to a worsening of living standards. We may also be confronted with false choices, seeing trade-offs between output and environmental protection that don’t exist. By contrast, a better measure of economic performance might show that steps taken to improve the environment are good for the economy.

An article by Saamah Abdallah, researcher at the New Economics Foundation (nef), calls the new report “bold. (See “Sarkozy and Stiglitz challenge GDP ‘fetish.'”)

However, Abdallah sees a danger if policy leaders decide to take only partial measures to correct the current GDP mindset:

The report carries many recommendations, and there’s a risk that politicians will latch onto the easier ones, without really taking home the big message: namely, that we need to radically shake up our understanding of progress and success.

Abdallah’s organization has created a “Happy Planet Index” designed to measure humanity’s progress in a more holistic fashion.

AB — 14 Sept. 2009

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