Beyond Gdp Paper
Journal of Economic Literature 2009, 47:4, 1029–1075 http:www.aeaweb.org/articles.php?doi=10.1257/jel.47.4.1029
Beyond GDP: The Quest for a Measure of Social Welfare
Marc Fleurbaey*
This paper critically examines the various approaches to the measurement of individual well-being and social welfare that have been considered for the construction of alternatives to GDP. Special attention is devoted to recent developments in the analysis of sustainability, in the study of happiness, in the theory of social choice and fair allocation, and in the capability approach. It is suggested in the conclusion that, although convergence toward a consensual approach is not impossible, for the moment not one but three alternatives to GDP are worth developing. ( JEL I31, E23, E01)
1. Introduction
G
DP is recurrently criticized for being a poor indicator of social welfare and, therefore, leading governments astray in their assessment of economic policies. As is well known, GDP statistics measure current economic activity but ignore wealth variation, international income flows, household production of services, destruction of the natural environment, and many determinants of well-being such as the quality of social relations, economic security and personal safety, health, and longevity. Even worse, GDP increases when convivial reciprocity is replaced by anonymous market relations and when rising crime, pollution, catastrophes, or health hazards trigger
* Fleurbaey: CNRS, University Paris Descartes, CORE (Université de Louvain) and IDEP. Comments, suggestions and advice by S. Alkire, G. Asheim, A. Atkinson, A. Deaton, E. Diewert, R. Guesnerie, D. Kahneman, A. Krueger, I. Robeyns, P. Schreyer, three referees and Roger Gordon (the Editor) are gratefully acknowledged.
defensive or repair expenditures. Not surprisingly, the construction of better indicators of social welfare is also, recurrently, a hot issue in public debate and a concern for politicians and governments.
Beyond GDP: The Quest for a Measure of Social Welfare
Marc Fleurbaey*
This paper critically examines the various approaches to the measurement of individual well-being and social welfare that have been considered for the construction of alternatives to GDP. Special attention is devoted to recent developments in the analysis of sustainability, in the study of happiness, in the theory of social choice and fair allocation, and in the capability approach. It is suggested in the conclusion that, although convergence toward a consensual approach is not impossible, for the moment not one but three alternatives to GDP are worth developing. ( JEL I31, E23, E01)
1. Introduction
G
DP is recurrently criticized for being a poor indicator of social welfare and, therefore, leading governments astray in their assessment of economic policies. As is well known, GDP statistics measure current economic activity but ignore wealth variation, international income flows, household production of services, destruction of the natural environment, and many determinants of well-being such as the quality of social relations, economic security and personal safety, health, and longevity. Even worse, GDP increases when convivial reciprocity is replaced by anonymous market relations and when rising crime, pollution, catastrophes, or health hazards trigger
* Fleurbaey: CNRS, University Paris Descartes, CORE (Université de Louvain) and IDEP. Comments, suggestions and advice by S. Alkire, G. Asheim, A. Atkinson, A. Deaton, E. Diewert, R. Guesnerie, D. Kahneman, A. Krueger, I. Robeyns, P. Schreyer, three referees and Roger Gordon (the Editor) are gratefully acknowledged.
defensive or repair expenditures. Not surprisingly, the construction of better indicators of social welfare is also, recurrently, a hot issue in public debate and a concern for politicians and governments.