GDP not adequate measure of progress: Stiglitz
Stating the gross domestic product (GDP) is not an adequate measure of human well being and progress, Nobel Laureate and professor of Economics Joseph E Stiglitz today said there is a need to develop alternative and more comprehensive measures to gauge progress.
"In spite of the fact that Simon Kuznet who was given credit for establishing of GDP had warned that GDP was not good measure of economic well being and progress, GDP has become measure of economic success and human well being," he said.
He was rendering the key note address at the 4th Organisation for Economic Co-Operation and Development (OECD) conference here.
Stiglitz said it is time that the economic professionals began to use alternative methodologies for measuring success in their analytical and policy-related work.
GDP is monetary value of all the finished goods and services produced within a country's borders in a specific time period. GDP per capita is often considered an indicator of a country's standard of living.
He said the evaluation of wrong performance parameters in the financial sector in the US caused damage not just to the firms themselves, but to their workers and investors, Stiglitz said," adding ...what is measured and how performance is evaluated can distort outcomes".
On the issue of inequality, Stiglitz said GDP per capita does not measure what is happening to most citizens if at the same time there are changes in income distribution. GDP per capita could be going up and yet most citizens could be becoming worse off in such situations, he said.
