Isn't There Something Better Than GDP?

As Megan McArdle wrote last year, GDP isn't a very good way to measure well-being or positive production. An expensive house that never sells counts toward GDP but it bankrupts its owner. A costly post-hurricane clean-up effort lifts regional GDP, but it might leave thousands of people homeless at the same time. Umair Haque calls for something better:

New measures of national income. GDP is outdated; inaccurate, invalid, and unreliable. Better measures of national income that count real costs (like pollution) and benefits (like health) are what will shape better behavior from organizations and markets.

Measures of well-being. GDP is a measure of income. What's missing from that picture? Well-being, of course. More income doesn't automatically make everyone better off all the time, in the same ways. Without measures of well being to live up to, no better behavior is likely to ever flow from organizations and markets.

Read the full story at Harvard Business Review.