Most everyone agrees that GDP is highly flawed measurement of economic well-being, but it’s still the best thing we’ve got. People have been trying for decades to create new measures that take into account things such as environment, leisure time, health, and other factors, but so far there’s no standard.
The U.S. recently launched a nonprofit and nonpartisan institution – the State of the USA – to develop better, more comprehensive measures of economic and human progress. This group has some top people and is working with the National Academy of Sciences to come up with good data and solid statistics.
I see this as pretty much replacing (or enhancing) GDP with a comprehensive set of “happiness” measures. This may sound a little out there, but happiness is a hot area of research. More and more people seem to be realizing that happiness – in one form or another – should be the real goal of an economy, not just wealth for it’s own sake.
Given that what gets measured gets done, we need to measure more than just production, and the Key National Indicators are trying to do just that. We’ll have to wait and see, but this could turn out to be a landmark project that changes the way we think about the economy, and may even put the U.S. in the forefront of progressive economic thinking.