The Growing Discussion on Measuring Economic Growth

Mar 1st, 2012 | By | Category: Economics and GDP

By Suzanne York,, Feb. 29, 2012

Photo: Emmanuel Huybrechts:

Economic growth is virtually always in the news. Stories about the economy and individual companies often focus on successful growth or bemoan it’s absence. Our politicians repeatedly promise more economic growth. The reality is that we live in a world of finite resources, many of which are becoming depleted, and cannot “grow” forever. We need a measure of economic success that relates better to the well-being of the members of our society than the current universally-cited gross domestic product (GDP). Fortunately, alternatives to GDP are beginning to pop up more often in mainstream news.

Take, for instance, a couple of recent speeches by Connie Hedegaard, the European Commissioner for Climate Action. She stated that growth in and of itself is not the problem, but the way we have grown, and continue to grow, that is the fundamental challenge. Growth as we know it, she said, “will lead to incomprehensible problems in the future, not least due to the stress we cause to our ecosystems, our climate, and other natural resources, like for example water.”

It is encouraging to hear Hedegaard’s admission that “…we cannot deal with the challenges of the 21st century with a growth model from the 19th and 20th century.” She called for an intelligent growth model – one that goes beyond GDP – and smarter consumption.

This past January the United Nations Secretary-General’s High Level Panel on Sustainability released a report which, amongst other things, called upon the international community to measure development beyond GDP and create a new set of indicators.

The idea has been around for some time. Economists such as Joseph Stiglitz, Amartya Sen, and Herman Daly, and politicians such as Nicholas Sarkozy of France and David Cameron of the U.K. have been studying the links between wealth and well-being for many years, concluding that money, beyond a quantity sufficient for basic needs, does not make us happier.

In 2010, German Chancellor Angela Merkel issued a joint statement with the heads of the IMF, the World Bank, the World Trade Organization and others, saying that a key lesson of the recent economic crisis was that “traditional concepts of growth” are inadequate.

And last year Reuters ran an article which reported that the U.S. Bureau of Economic Analysis (the federal agency that calculates GDP) published a paper proposing new measures for household economic well-being, the economic impact of energy, and other important areas.

In a report by 18 past winners of theBlue Planet Prize, considered the unofficial Nobel for the environment, top scientists, academics and others stated that”The perpetual growth myth … promotes the impossible idea that indiscriminate economic growth is the cure for all the world’s problems, while it is actually the disease that is at the root cause of our unsustainable global practices”.

The report calls for recognizing the limits of GDP and replacing it as a measure of wealth with a measure that integrates economic, environmental, and social dimensions.

People are taking the bull by the horns and working on promoting a new system that moves beyond GDP.  It is a movement called the economics of happiness.  Currently there is a thought-provoking film playing around the world, also named “The Economics of Happiness“, and an upcoming conference.  The movie discusses how we became addicted to economic growth, the ramifications of that addiction, and ways to move past it for the health of people, communities and the planet.  The conference, to be held in Berkeley, CA March 23-25, 2012, will bring speakers from around the world to talk about real world examples and how to strengthen a growing global movement.

Go see the film, and if possible, attend the conference.  Let’s keep up the discussion and even better, take action and create better economies for all.

Suzanne York is a senior writer with the Institute for Population Studies /

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