GDP Tunnel-Vision Could Prove Costly: Let's Redefine Prosperity

This measure doesn't capture inequality and its maximization often rewards activities that hurt democracy and the planet

- KAUSHIK BASU

In mainstream economics, description is routinely treated as secondary to analysis. Labeling a work as 'purely descriptive' conveys dismissiveness. Yet, as Nobel laureate economist Amartya Sen observed in a seminal 1980 paper, every act of description involves choices. Whether we are describing a historical event, an individual, or a country, what we choose to include and what we leave out can be critical. Description shapes perception. And perception, in turn, can profoundly influence behavior.

Describing the state of a country's economy is a complicated task. In the past, scholars wrote lengthy volumes debating whether one country was doing better than another. But over time, globally, a single measure has come to dominate the conversation: gross domestic product, or GDP for short, which represents the value of all goods and services produced within a country in a given year. With some adjustments, it also approximates the population's total income. It is an astonishingly concise metric, often used as shorthand for economic well-being.