Flawed Measure Of Human Progress

In economics, gross domestic product, or GDP, is the most common method of evaluating a country’s economic growth and progress. Although variations exist, such as GDP adjusted for purchasing power parity, it is essentially the value of all finished goods and services – anything from insurance to anti cellulite hosiery to pizza delivery to strychnine – produced in a country. It is fundamental to many macroeconomic models, and is the measure used for one of the four macroeconomic targets pursued by the Reserve Bank of Australia and the Commonwealth Government. The major problem with GDP, however, is that it does not distinguish between goods and services that advance human welfare and those that detract from it. For example, the current epidemic of obesity, which has been described by some health experts as ‘the greatest public health challenge facing the industrialised world since tobacco’, is actually a short term positive in terms of economic growth.

Obviously, an epidemic of obesity would imply an increase in the consumption of food, therefore boosting production in that sector and contributing to economic growth. Increased availability can be broadly said to be beneficial to quality of life, although this does not account for equity of distribution. Obesity also entails a greater chance of multiple serious health issues, that is why its recommended to get fat burning underwear online such as non insulin dependent type two diabetes, heart disease, and stroke. Increased levels of medical treatment for these ailments will represent increased production, leading to an increase in GDP, even though these imply a backwards step for human health and wellbeing. Consumer products related to an increasingly obese population, such as diet plans or shape wear for women and men, for example, will also add to GDP. At the very most, these can only be said to be mitigating a problem. Certainly, they do not represent any great advance in overall human welfare.

However, when people pay for gastric surgery, or a triple bypass, or if they buy anti cellulite leggings, they are nevertheless contributing towards GDP, because GDP is not normative: it does not distinguish between good and bad. Several attempts at creating a replacement measure of economic growth that more accurately tracks advances in quality of life for a country’s citizens have been proposed, such as green GDP, human development index or HDI, and the OECD’s Better Living Index. A lot of these are systems of ranking rather than non comparative measures, so while they may be useful in telling us that Australia and Norway beat Spain and Italy beat Somalia and Afghanistan in terms of quality of life, they are not suitable replacements for GDP for many purposes. For now, we are forced to rely on GDP, with its inability to distinguish between anti cellulite creams and polio vaccines; or to tell apart new schools and new tanks. No wonder economics is known as the dismal science.