The joy of GDP – and beyond

Late last week I attended a special IARIW-OECD conference on the future of the national accounts, and don’t tune out – it was fascinating. I’ll write up my own talk soon: one of my two main themes was that whatever approach one takes to measuring economic and social progress, there needs to be a more explicit social welfare framework informing the measurements. It’s often said that GDP is not a measure of welfare but of activity, and yet we freight it with value judgements and use it as an indicator of living standards.

All the alternatives have the explicit aim of measuring welfare but end up usually as ad hoc lists because the analytic framework is only implicit. A recent example is the Social Progress Index published recently (and Michael Porter explains its rationale here), which has 54 indicators in 12 categories and makes a point of excluding economic measures such as employment and income, which seems odd to me given that surely we want to understand the trade-offs. Anyway, the indicators included are all Good Things, but then so are the categories in the OECD’s Better Life Index and the Human Development Index. How should we choose?

Anyway, clarity about the relationship between the economy and nature on the one hand, and the economy and non-efficiency, social indicators on the other, was on the mind of many participants at the conference. The conference papers are well worth a browse.

GDP is certainly a surprisingly popular subject at the moment. Apart from my own GDP: A Brief but Affectionate History, there was Zachary Karabell’s The Leading Indicators (which I reviewed for the New York Times) and Lorenzo Fioramonti’s Gross Domestic Problem. These were all published around the same time. In June there will be Dirk Philipsen’s Little Big Number: How GDP Came to Rule the World and What to Do About It, which I’m half way through and is in the Fioramonti vein. At the conference Quentin Dufour pointed me to a French book (published in English in 2002) by Alain Desrosières, The politics of large numbers: a history of statistical reasoning.

GDP: A Brief but Affectionate History  The Leading Indicators: A Short History of the Numbers That Rule Our World  Gross Domestic Problem: The Politics Behind the World’s Most Powerful Number (Economic Controversies) by Lorenzo Fioramonti published by Zed Books (2013)  The Little Big Number: How GDP Came to Rule the World and What to Do about It  The Politics of Large Numbers: A History of Statistical Reasoning

The wave of publication is surely a sign that something is shifting? The last big wave of books about measuring the economy dates to the early years of national income accounting, including Richard Stone’s The Role of Measurement in Economics and J.R. Hicks’ The Social Framework.

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3 thoughts on “The joy of GDP – and beyond

  1. Pingback: The joy of GDP – and beyond | Homines Economici

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