The Atlantic is on the warpath against GDP. More than a decade ago, we published the article "If the GDP Is Up, Why Is America Down?" More than a year ago, we published the article Misleading Indicator on how GDP is good at measuring activity, but bad at measuring the condition of the economy. Megan McArdle explained:
Think about a house, any of the millions that were constructed during the bubble that burst in 2008. Let's make it a nice house: four bedrooms, 3.5 baths, with an attached garage and a quarter-acre lot. During its construction, that house did its own little bit to boost GDP. Lumber was purchased and swathed in fluttering robes of Tyvek. Tiles were pressed out of clay and nailed to the roof. Pipe was laid, glass was sealed into the window slots, granite was hewn from a Vermont mountain and shipped all the way to its kitchen counters. All of this output, which swelled GDP (at least to the tune of its purchase price), has ended up in ... nothing. The house, in an exurban cul-de-sac, sits empty while bankers, borrowers, and regulators squabble.
There are some accepted alternatives. For example, the Human Development Index measures income, longevity and education attainment to approximate the quality of life in every country. Another popular alt-indicator is the well-being index from U.K.'s Office of National Statistics. One thing seems to be certain: When you factor in "quality of life," European countries fly to the top of the list:
Read the full story at WSJ.
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