GDP and Its Enemies: The Questionable Search for a Happiness Index

Abstract

The financial crisis and global warming have led to a crisis of confidence in ourtraditional ways of measuring wealth because they do not take speculative risk andenvironmental costs into consideration. A number of alternative indexes have beenproposed that would measure people’s well-being and the environmentalsustainability of the planet.Even though the gross domestic product (GDP) measure has its problems, a look atthe alternatives reveals that they are constructed with a specific political agenda inmind and are easily manipulated by governments. In fact, a strong argument forsticking with GDP is that it is narrow in scope and value free. It tells us what we cando, but not what we should do, and does not even try to define well-being. It fits aliberal, pluralistic society where people have different interests, preferences andattitudes to well-being. Our present environmental and financial problems can andshould be solved within the intellectual framework of economic growth.