Quality of Life – Good-Bye GDP

Everybody wants to be wealthy, which is usually measured in terms of GDP (GDP: the sum of all domestically produced goods and services). While this is important to our life, it is clearly not enough. Also, the value of existing goods and of nature is not taken into account, even they very important for the well being of people. Now imagine a big flooding, which destroys innumerable goods but doesn’t negatively affect GDP. Worse, due to the replacement of destroyed goods, GDP will even rise without those affected being any better than before. That’s obviously a big problem in measuring wealth and making an ever-increasing GDP the goal of economic policy is highly questionable.

In order to eliminate these shortcomings of measuring wealth, the Green party of the German state Schleswig-Holstein ordered an alternative measure to be calculated. One that includes sustainable energy production, the quality of air and water, criminality and various social indicators like income distribution among the states inhabitants. Result: In contrast to the traditional GDP measure, Schleswig-Holstein now is the top-performer in Germany. Despite having a relatively low GDP, its people enjoy an excellent quality of life.

Noteworthy! What would you prefer? Isn’t it obvious that this alternative wealth indicator is much more suitable for guiding our economic policy than striving for just increasing GDP? GDP certainly is an interesting economic figure but simply not suitable for this purpose. The German initiative is goodnews because it hopefully initiates more such statistics and eventually makes national and international actors move away from using GDP for calculating wealth.

Source: Zeit

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