Is GDP really a good measure?

The World Economic Forum had an interesting video about the downfalls of using GDP.

The standard economic model based on “growth” is outdated and massively flawed. This is a topic for a lengthy debate but GDP per capita and median income are already much better metrics to determine the health of an economy. Debt, disposable income and skill base would be used for the next level of analysis.

Growth per se cannot lead to conclusion of societal improvements or development. For like an access to financing per se cannot be enough for it take the right allocation of that capital, it is the sense given to growth that is critical and this is the fact of a retrospective judgement growth per se cannot provide.

However, it is not so much that GDP is a flawed indicator. The problem resides in the fact that it has often been promoted as the sole measure of societies’ well-being – which it was not designed to do. As Simon Kuznets pointed out: “Distinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long run… “Goals for ‘more’ growth should specify more growth of what, and for what”. (The New Republic [1962])

GDP still has its place but only in complement with other measures which cover other social and well-being dimensions of societies. It’s a good objective measure for what it is. It’s not perfect. But what is?

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