John Hayward Posted: 14 September 2009
Keywords: Finance & the Economy,
Nobel Prize-winning economist Joseph Stiglitz has urged world leaders to drop their obsession with examining gross domestic product and to focus more on broader measures of prosperity.
Co-author of a report commissioned by French President Nicolas Sarkozy being presented in Paris today, Stiglitz warns ‘Most governments make a fetish out of it. If you take one message out of our report, make it “avoid GDP fetishism.”’
This is something the Jubilee Centre has warned about for some time. See, for instance, our 2006 Cambridge Paper What Charter for Humanity? Defining the destination of development or our January 2008 Winter School video interview Is GDP an adequate measure of growth?
The problem with GDP is it fails to measure progress and tells us nothing about our overall wellbeing. So, as we note in our forthcoming companion volume to Jubilee Manifesto, due to be published next April, ‘If you pay someone to do your washing up and they pay you to do theirs, GDP goes up with no real benefit to either of you. Worse, GDP includes unsustainable spending habits; take the car to work instead of walking and you increase the country’s GDP in the cost of fuel and maintenance, but at the expense of increased pollution and poorer health.’
As a New York Times columnist concluded last month, ‘We’re in an economic hole, and as we climb out, what we need is not simply a measurement of how much money passes through our hands each quarter, but an indicator that will tell us if we are really and truly gaining ground in the perennial struggle to improve the material conditions of our lives.’
When the Bible talks about development, its emphasis is on the quality of social, political, and economic relationships, something we have summarised as ‘relational well-being’ (RWB). The problem, as Stiglitz acknowledges, is how to quantify this: ‘So many things that are important to individuals are not included in GDP. There needs to be an array of numbers but we need to understand the role of each number. We may not be able to aggregate everything together.’
The list of key relationships and possible indicators that we suggested in What Charter for Humanity? were as follows:
| Relationship issue | Indicator |
| Intra-family trust/commitment | Marriage rate, divorce rate, birth rate, levels of household debt. |
| Social isolation of older people | Number of contacts per week, percentage who feel lonely. |
| Workplace relationships | Extent of absenteeism and pay differentials within organisations. |
| Gender relations | Incidence of domestic violence/rape/prostitution, hits on pornographic websites, gender ratio at different educational levels. |
| Intra-community relations | Crime levels, proportion knowing names of neighbours, incidents of vandalism, percentage drug addiction, suicide rate. |
| Inter-racial/ethnic relations | Incidents of racial/ethnic violence, comparative income/education levels. |
| International relations | Aid (including private charity) as proportion of GDP, levels of carbon emissions, flow and treatment of migrants, cost of a visa. |
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