In a growing number of countries, new instruments are being put in place to end an excessive reliance on GDP as the single yardstick for measuring development. Beyond the mere publication of indicators whose aim is to measure the various dimensions of economic, social and environmental performance, parliaments have passed laws mandating the publication of annual reports on the quality of growth, and governments themselves have put in place scoreboards of various types.
The case for broadening the approach to economic development is not new. Even the founding fathers of national accounts acknowledged that GDP has many shortcomings: it neglects domestic labor and unpaid community services (as the old joke goes, a man who marries his cleaning lady actually reduces GDP), it counts nuisances as positives (traffic jams increase GDP) and it does not value the depletion of natural resources (an oil-producing country has a higher GDP if it draws excessively on its reserves than if it manages them wisely), to name just a few. Furthermore GDP is a gross concept, which may render its evolution misleading. For example, a country can impoverish itself because it does not invest enough to replace the capital stock, yet register a positive GDP growth rate.
But the case for a change has got stronger. One reason is clearly environmental sustainability. It is simply mind-boggling to think that we could gradually engineer a climate disaster yet fail to record the growing risk of it in our economic indicators. The same largely applies to financial sustainability. Spain's impressive growth record in the 2000s was built on debt and ended in a collapse. As long as the bubble continued to develop, however, the government could – and actually did – claim success. Equally, income inequality is a cause for concern. Growth means little if half of the population hardly benefits from it, as was the case in the United States in the first decade of the century.
True, in these cases it would be incorrect to claim that governments are not or were not informed. But it is one thing to diagnose what may go wrong and something else to ensure that information is provided in such a way that governments are incentivized to act. When parliament, journalists and the public are all focused on a single number, policymakers inevitably give to this number a greater weight than warranted by social preferences. But things are likely to be different when other numbers are given official recognition. What gets measured and publicized – or not – matters enormously.