The GDP Obsession

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 behaviour.

- 

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, a single measure has come to dominate the conversation: gross domestic product (GDP), 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.

As Diane Coyle noted in her 2014 book on the history of GDP, its emergence marked a watershed moment in economic policymaking. Developed by Simon Kuznets in the early 1930s, GDP has brought much-needed rigor to policy debates. Politicians could no longer simply point to tall buildings as evidence of progress (though many still do). Today, assessing a country's economic performance over time means tracking the growth of its GDP.

To be sure, there are other ways to assess national well-being, such as the United Nations Human Development Index and the World Bank's shared prosperity indicator. But when it comes to determining whether one economy is outperforming another, GDP (or GDP per capita) remains the default benchmark.