GDP is getting a makeover — what it means for economies, health and the planet


Article by Ehsan Masood: “The numbers are heading in the wrong direction. If the world continues on its current track, it will fall well short of achieving almost all of the 17 Sustainable Development Goals (SDGs) that the United Nations set to protect the environment and end poverty and inequality by 2030.

The projected grade for:

Eliminating hunger: F.

Ensuring healthy lives for all: F.

Protecting and sustainably using ocean resources: F.

The trends were there before 2020, but then problems increased with the COVID-19 pandemic, war in Ukraine and the worsening effects of climate change. The world is in “a new uncertainty complex”, says economist Pedro Conceição, lead author of the United Nations Human Development Report.

One measure of this is the drastic change in the Human Development Index (HDI), which combines educational outcomes, income and life expectancy into a single composite indicator. After 2019, the index has fallen for two successive years for the first time since its creation in 1990. “I don’t think this is a one-off, or a blip. I think this could be a new reality,” Conceição says.

UN secretary-general António Guterres is worried. “We need an urgent rescue effort for the SDGs,” he wrote in the foreword to the latest progress report, published in July. Over the past year, Guterres and the heads of big UN agencies, such as the Statistics Division and the UN Development Programme, have been assessing what’s gone wrong and what needs to be done. They’re converging on the idea that it’s time to stop using gross domestic product (GDP) as the world’s main measure of prosperity, and to complement it with a dashboard of indicators, possibly ones linked to the SDGs. If this happens, it would be the biggest shift in how economies are measured since nations first started using GDP in 1953, almost 70 years ago.

Guterres’s is the latest in a crescendo of voices calling for GDP to be dropped as the world’s primary go-to indicator, and for a dashboard of metrics instead. In 2008, then French president Nicolas Sarkozy endorsed such a call from a team of economists, including Nobel laureates Amartya Sen and Joseph Stiglitz.

And in August, the White House announced a 15-year plan to develop a new summary statistic that would show how changes to natural assets — the natural wealth on which economies depend — affect GDP. The idea, according to the project’s main architect, economist Eli Fenichel at the White House Office of Science and Technology Policy, is to help society to determine whether today’s consumption is being accomplished without compromising the future opportunities that nature provides. “GDP only gives a partial and — for many common uses — an incomplete, picture of economic progress,” Fenichel says.

The fact that Guterres has made this a priority, amid so many major crises, is a sign that “going beyond GDP has been picked up at the highest level”, says Stefan Schweinfest, the director of the UN Statistics Division, based in New York City…(More)”.