Down with the GDP

In the November, 2009 edition of The Atlantic, Megan McArdle reminds us why we need to wean ourselves of using the GDP as an indicator of economic health. Here's a sample:

GDP does not, and cannot, reflect the waste of enormous effort, and precious natural resources, that went into building something that suddenly no one wants. Moreover, it misses many other aspects of our existence. Strip-mining a picturesque mountaintop, or clear-cutting a primeval forest, shows up in GDP only as a boost to output. Meanwhile, in India’s national accounts, all of Mother Teresa’slabors among the poor would have had only the most minimal possible impact. GDP can record how much money we spend on health care or education; it cannot tell us whether the services we are buying are any good.

So how do you accurately measure a nation's health? One alternative is the HDI.

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The twelve countries with the highest quality of life

The twelve countries with the highest quality of life do not include the United States. We come in at number 13, which means that we''re not doing badly as a whole. But we're not doing as well as we should be doing, assuming (as many conservatives insist without reference to any metric) that there is no greater country than the United States. We were beaten in the rankings by many "socialist" countries, such as Norway, Canada, Sweden and France. The U.N.'s measurement system is the Human Development Index, a complex objective formula, not a subjective determination. Some of the many dozens of factors that go into the HDI include the following:

  • Adult illiteracy rate
  • Asylum seekers by country of asylum
  • Average annual change in consumer price index (%)
  • Children underweight for age (% under age 5)
  • Combined gross enrolment ratio in education (%)
  • Earned income (estimated), ratio of female to male
  • Female adult literacy rate (% aged 15 and above)
  • Female estimated earned income (PPP US$)
  • Female life expectancy at birth (years)
  • GDI rank
  • GDP per capita (PPP US$)
  • Government expenditure on health as a percentage of total government expenditure
  • Government expenditure on health per capita (PPP US$)
  • Healthy life expectancy at birth (years)
  • Human development index value
  • Human poverty index (HPI-1) rank
Consider, also, this recent news from the Commonwealth Fund:

Although the United States now spends $2.4 trillion a year on medical care — vastly more per capita than comparable countries — the nation ranks near the bottom on premature deaths caused by illnesses such as diabetes, epilepsy, stroke, influenza, ulcers and pneumonia

Continue ReadingThe twelve countries with the highest quality of life