Nobelist Stiglitz: GDP not a good measuring stick

Economics Nobelist Joseph Stiglitz has been hired by French President Nicolas Sarkozy to come up with a better way of measuring national economic well-being. Here’s his take on the issue:

Stiglitz said the current yardsticks “only reward governments if they increase materialistic production.

“If you improve the quality of life, but it doesn't show up in more material consumption, it doesn't show up in GDP, and you’ll be criticized," the US economist told AFP in a phone interview. …

Stiglitz, known for his outspokenness and criticism of globalization, said the French president had given him “a broad-ranging mandate trying to put together a commission study on the broad questions of how do you measure well-being.

“Among the economics profession there has been a strong sense for a long while that gross domestic product is not a good measure. It doesn't measure changes in well-being, it doesn't measure comparisons of well-being across countries,” he said.

Thus, if political leaders “are trying to maximize GDP and GDP is not a good measure, you are maximizing the wrong thing and it can be counterproductive,” he said.

The former chief economist at the World Bank, who resigned in 1999 after accusing rich countries of not doing enough to help the poor, said he hoped the panel's findings would go beyond the French framework.

Let’s hope he can deliver.