Beyond GDP Study
Economic performance is generally being measured through GDP (Gross Domestic Product), a variable that has also become the de facto universal metric for 'standards of living'. However, GDP does not properly account for social and environmental costs and benefits. It is also difficult to achieve sustainable decision-making aiming at sustainable progress and wellbeing if welfare is being considered from a purely financial point of view. Sustainable development can be defined as "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs". Therefore, in order to effectively measure 'progress, wealth and well-being', one must go beyond GDP. This requires clear and at the same time multidimensional indicators showing the links among a community's economy, environment, and society.
The study highlights the benefits and some of the shortcomings of GDP. It serves a crucial and helpful role in macroeconomic policy, both monetary and fiscal policies. GDP is also fairly unique in that it combines simplicity, linearity and universality, as well as carries the objectivity of the 'observable market price' as its guiding principle. Attempting to abolish GDP, therefore, would be neither feasible nor recommendable. The real problem presumably is that GDP growth is too often confused with (sustainable) welfare growth in people’s, and policy-makers', minds.
The study. Fool on!