cultivar_22_Final_EN

Measuring well-being and progress “beyond GDP” For many decades, the traditional approach for assessing countries’ success has largely been by using indicators of economic growth (GDP) as a proxy measure for overall well-being and progress. In the 1930s, the economists Simon Kuznets, in the U.S., and Richard Stone, in the U.K., developed the system of national account- ing, on which GDP is based. They were not really con- cerned with measuring over- all welfare or progress – their main goal was to make it eas- ier for policy makers to man- age a national economy at a macroeconomic level. By adding the value of all final goods and services that are produced and traded for money within a given period of time, typically a quarter or a year, GDP represents a good measure of market production. It has the advantage of allow- ing to aggregate entities with different units and to summarize them in one single monetary figure. Moreover, once the figure is adjusted per capita and purchasing power parity, it can be easily compared across nations. The rationale behind using GDP as a proxy meas- ure for overall well-being or progress is that GDP growth can be associated with other important aspects of societal progress, such as increased life expectancy, reduced child mortality, and higher lit- eracy rates. This correlation is far from perfect however, and GDP growth and better living standards are not syn- onymous: if the benefits of growth are too highly con- centrated, or if growth comes with high social and environ- mental costs, for example, the relationship between growth and well-being can be put at risk. Indeed, GDP presents many shortcomings as ameas- ure of well-being. At the level of society as a whole, GDP interprets every expense as positive and does not distinguish welfare-enhancing activities from 55 Time to focus on what matters: an agenda for measurement and policy* Martine Durand Co-Chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress; Former OECD Chief Statistician * Editor’s note: Originally translated into Portuguese and published in CULTIVAR issue 19 – Macroeconomics and agriculture, April 2020, p. 33, as “É tempo de nos concentrarmos no que importa: uma agenda para a medição e as políticas”. https://www.gpp.pt/images/GPP/O_que_disponibilizamos/Publicacoes/CULTIVAR_19/#34 At the level of society as a whole, GDP interprets every expense as positive and does not distinguish welfare- enhancing activities from welfare- reducing ones.