Misleading Indicator - The Atlantic (November 2009)

Description

Misleading Indicator

H ere’s a question no one ever asks about the Great Recession: How do we even know it’s happening? Daily, almost, someone releases employment figures, production estimates, consumer-confidence indexes—almost all of them bad. There’s no need to wonder what’s happening when information about everyone’s problems constantly streams across your TV screen.

And in this dolorous statistical parade, no number is quite so central to public life as the gross domestic product. Political scientists build formulas around it to predict who will win the presidency. The stock market trembles at the approach of new quarterly figures. Other economic statistics, like budget deficits or health-care spending, are quoted as percentages of GDP. It has become the common denominator of economic well-being.

But GDP’s broad dominion has long had its critics. It was never meant to be the measure of our well-being, they say, only the measure of our production—literally, the total value of the goods and services produced within the national borders in a given year. While the quest for some broader measure of progress has been going on for a while (more than a decade ago, for example, The Atlantic was running articles like “If the GDP Is Up, Why Is America Down?” ), it may finally be gaining traction at a time when people understand, as never before, how easily GDP and well-being can diverge.

One of the leaders of a huge global effort to build a better statistical yardstick has been Enrico Giovannini, until recently the chief statistician of the Organization for Economic Cooperation and Development. Though the OECD is the global coordinator of the project, its partners represent a who’s who of economic development: the World Bank, various UN programs, the African Development Bank, and the European Commission. They are looking to create more-reliable metrics ...

Original URL

http://www.theatlantic.com/doc/200911/mcardle-gdp

http://www.theatlantic.com/doc/200911/mcardle-gdp