The Truth is Powerful
What GDP does and doesn’t tell us
Our main measure of the economy only tells us a fraction of what’s actually happening in the world. For the past several decades, society has been telling itself the same story about economic growth : that it is always good, that it should be fast, and that it is best measured by gross domestic product, or GDP. But what do we miss when we keep our attention on that one little number to tell us how everything is going? In focusing on that number, are we overlooking what it takes to achieve it?
GDP measures the monetary value of goods and services produced in a country. It contemplates things like consumption, government spending, business investments, and net exports. But there’s also a lot it leaves out, such as unpaid work, sales of used goods, and, perhaps most important, general well-being. Generally, countries with stronger and growing economies have higher standards of living. But GDP is only a decent-ish indicator of how things are going for people.
GDP has long had its fair share of detractors, from politician Robert F. Kennedy to former French President Nicolas Sarkozy to Nobel laureate Joseph Stiglitz . Critics worry that it masks inequality, which is why […]