Progress, economics and the good life

How do you measure progress? A question I’ve been thinking about because I gave a lecture on it yesterday to some students in Oxford. My forthcoming book is about the history (and future) of GDP, and one of the themes is the importance of the distinction between economic activity and social welfare – linked but different.

The difference has always been known. Simon Kuznets is often named as the founder of GDP, but he was opposed to using that concept, and argued instead for a measure of welfare. War was looming and he lost the debate. Many of the current arguments about alternative measures – including ‘happiness’ – miss the distinction, and although economists have always known that GDP does not measure welfare, they often ignore the difference. I’ve not yet read the forthcoming Brynjolfsson and McAfee book, , but I wonder how much they glide over it too. The recent column in the New Yorker by James Surowiecki makes it sound like they do.

[amazon_image id=”1480577472″ link=”true” target=”_blank” size=”medium” ]The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies[/amazon_image]

For more on the importance of the difference between GDP and welfare and why it might be growing – not just because of digital goods –  pre-order !

[amazon_image id=”0691156794″ link=”true” target=”_blank” size=”medium” ]GDP: A Brief but Affectionate History[/amazon_image]

Anyway, it wasn’t until today that I started looking at  by Edmund Phelps, about the central role of innovation in modern growth and, more, in the enabling of the good life. Obviously I should have read it last week. It looks right on theme, and it is pleasing to pick up an economics book that has a chapter on Aristotle.

[amazon_image id=”0691158983″ link=”true” target=”_blank” size=”medium” ]Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change[/amazon_image]

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  1. Pingback: Measuring progress | Johan Fourie's blog

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