The perils in the search for the perfect GDP alternative

AS EUROPE was miserably shivering with thermostats turned down and energy costs surging during the winter of 2022-23, the good news was that we in Britain were boosting net inclusive income per head. Everyone in the country moaning about broken public services is mistaken – their quality has been improving. And for almost two decades, the “inclusive” measure of capital (the nation’s wealth including human, natural and fixed capital) has not changed more than 2.1 per cent from its 2005 level in the face of global financial crises, pandemics and periods of austerity.

If you think these statistics are irrational, irrelevant or even nonsense, do not take it out on me or the UK’s Office for National Statistics (ONS), which produced these official figures earlier this month. The guilty party is those that hold the very popular view that we must ditch headline measures such as GDP and aim to rectify all the long known faults with this statistic.

Ever since Robert F Kennedy senior castigated GDP in 1968, saying “it measures everything . . . except that which makes life worthwhile”, statisticians have wanted to create holistic measures of well-being that included not only material market outcomes, but the quality of public services, unpaid household chores, the pollution of the planet’s air and waterways, cultural ecosystems, intellectual property and the degradation of our atmosphere by greenhouse gases. This, proponents have argued, would force politicians to have the right priorities and create a better society.