GDP as an Economic Indicator

12/22/2012 03:37:00 PM
An excellent post defending the use of GDP as a policy-relevant indicator on Vox.

I'd add something that I think the author implicitly means, but failed to clarify: happiness and welfare are not the same thing. I'd bet that there is someone in living in poverty in Africa with HIV and no access to medicine or even electricity, who is happier than I am. You can find happiness in anything. But as a well-off, disease-free economist at Cornell, I am still better off than that happy African. The point is, whether or not it makes him happier, providing anti-retroviral medications and other aid will increase his welfare, whether or not it makes that african happier.

That's not to say that public policy should be totally unconcerned with happiness. Ultimately, I see happiness as a state of mind, not a reflection of your general well-being. Any correlation between happiness and measures of well-being is purely incidental. Policies that make people happier--such as providing better access to anti-depressants--should not crowd out policies that increase welfare, such as those that cause GDP growth.