Limitations of Gross Domestic Product (GDP)
The standard measure of human wellbeing today is Gross Domestic Product (GDP). This measures no more than the size of an economy. GDP as a general measure of wellbeing is so deeply woven into the collective unconscious that our political leaders generally need do no more than announce at the end of every year the rate by which our economy has grown to assure the public that all is well.
The common acceptance of GDP as our principal indicator and measure of wellbeing has helped define us as consumers. By increasing consumption, so the story goes, the economy grows and collective wellbeing grows with it.
There is however, growing recognition of the limitations of GDP as a true measure of wellbeing. Are there not many things included in GDP that can scarcely be described as adding to the sum of happiness? Consumption of cigarettes, traffic jams, ecological disasters that require major clean-up operations and war – all could be said to have an adverse effect on human wellbeing while being good for the economy.
Similarly, there are many things that clearly do make us happy but that are not included in the measure of GDP: love, friendships, a vibrant and supportive community, volunteering, free time…….the list is almost endless.
To truly measure the wellbeing of individuals, communities and ecosystems, we need something more nuanced.