GDP is the wrong tool for measuring what matters (2020)

Just as the dashboard emerged from a dire need-the inadequacy of the GDP as an indicator of well-being, as revealed by the Great Recession of 2008-so did the GDP. During the Great Depression, U.S. officials could barely quantify the problem. Over time, as economists focused on the intricacies of comparing GDP in different eras and across diverse countries and constructing complex economic models that predicted and explained changes in GDP, they lost sight of the metric's shaky foundations. GDP became hegemonic across the globe: good economic policy was taken to be whatever increased GDP the most. Too, coal mining seemingly boosted the economy, and although it helped to drive climate change, worsening the impact of hurricanes such as Harvey, the efforts to rebuild again added to GDP. The GDP number provided an optimistic gloss to the worst of events. These examples illustrate the disjuncture between GDP and societal well-being and the many ways that GDP fails to be a good measure of economic performance. The increase in bank profits that seemed to fuel GDP in the years before the crisis were not only at the expense of the well-being of the many people whom the financial sector exploited but also at the expense of GDP in later years. A good indicator of the true health of an economy is the health of its citizens, and if, as in the U.S., life expectancy has been going down-as it was even before the pandemic-that should be worrying, no matter what is happening to GDP. If median income is stagnating even as GDP rises, that means the fruits of economic growth are not being shared.