Every three months, the government takes the temperature of the economy by releasing Gross Domestic Product, or GDP, figures. GDP goes up: the economy is supposedly healthy. GDP goes down: there’s a bug (or an all-out contagion, as during the Great Recession).
But GDP — which adds up the value of work being done, widgets created, profits made, money spent by consumers and the government, and things invested and exported — was never meant to accurately assess everything happening in the economy. It was createdduring the New Deal to see whether the programs were really helping. The creator of the GDP measure itself, Simon Kuznets, warned, “The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP.”
So a handful of groups have tried to create alternative measures that would gather more information. “Green GDP” measures would factor in the environmental side effects of economic production. Others measure leisure, happiness, and overall welfare and quality of life.