Normally, the economic well being of a nation is measured by its Gross Domestic Product (GDP). GDP assumes that if there were more goods in circulation, general welfare would automatically follow. At a conference in Cleveland, a recent survey of citizen’s perceptions of well being across countries by Gallop, surprisingly, revealed that Singapore, which is the richest country in Asia, after Japan, and one of the most efficient and least corrupt societies in the world, scores the lowest in the Well-being Index. Surprisingly, people in Singapore are less satisfied with their lives than much poorer and less efficient countries. Evidently, according to the survey, to be respected as a free human being and to have the freedom to make personal choices– parameters on which Singaporeans give their society a low score–contribute much more to people’s feelings of well being than economics – click here for full article
WASHINGTON (AFP) – Joseph Stiglitz, the Nobel laureate economist tapped to head a new French study, said Tuesday he sees gross domestic product (GDP), the most often cited yardstick, as an imperfect indicator.
Stiglitz, named by French President Nicolas Sarkozy to head a panel to find a new method of economic calculation that will include quality-of-life factors, said the current yardsticks “only reward governments if they increase materialistic production.”
“If you improve the quality of life, but it doesn’t show up in more material consumption, it doesn’t show up in GDP, and you’ll be criticized,” the US economist told AFP in a phone interview.
Sarkozy earlier announced in Paris that Stiglitz and a fellow Nobel economics laureate, Amartya Sen of India, will participate in the project.
The 64-year-old winner of the Nobel economics prize in 2001 and currently a professor at Columbia University in New York, is to chair the panel.
Stiglitz, known for his outspokenness and criticism of globalization, said the French president had given him “a broad-ranging mandate trying to put together a commission study on the broad questions of how do you measure well-being.”
“Among the economics profession there has been a strong sense for a long while that gross domestic product is not a good measure. It doesn’t measure changes in well-being, it doesn’t measure comparisons of well-being across countries,” he said.
Thus, if political leaders “are trying to maximize GDP and GDP is not a good measure, you are maximizing the wrong thing and it can be counterproductive,” he said.
The former chief economist at the World Bank, who resigned in 1999 after accusing rich countries of not doing enough to help the poor, said he hoped the panel’s findings would go beyond the French framework.
“Hopefully this will have global consequence,” he said.
“It doesn’t necessarily mean that there will be a replacement of current measures, but maybe a construction of complementary measures,” he said.
He said there was some discussion about the possible participation of other countries in the project.
“Whether we will do it just under the auspices of the French government or whether there will be other partners is a question that is still open,” he said.
For him, measuring growth is a global issue made even more urgent by the problems caused by global warming.
“The standard measures of GDP do not measure the degradation of the environment, the depreciation of natural resources.”
And GDP growth can mask a sharp decline in individuals’ quality of life, he argued.
“It’s been particularly true in the US where GDP has been going up but actually most people not only feel worse off, their measure of income is actually going down,” he said.
Stiglitz said he had agreed to take on the project only after the French government assured him the new panel “will have complete liberty” to define the problem and to analyze it.
“I think that on all sides of the political spectrum there is a recognition of these deficiencies, and a recognition that it is important that we develop better metrics, no matter whether you are on the left or the right.”
Stiglitz said he had spoken with Sen, who would be a member of the panel and an adviser. Sen won the Nobel economics prize in 1998 for work on developing economies and on well-being in India.
Stiglitz said the timeframe for the project had not yet been determined, but he was aiming for a result in the “medium term,” or within the next 18-24 months.