Your fathers’ mistakes: Critiques of GDP and the search for an alternative

• DOI: http://doi.org/10.1111/infi.12148
• Date: 01 December 2018
• Author: Brent R. Moulton
• Published date: 01 December 2018

DOI: 10.1111/infi.12148

BOOK REVIEW

Your fathers’mistakes: Critiques of GDP

and the search for an alternative

BRENT R. MOULTON

Economist and Consultant (retired from US Bureau of Economic Analysis)

THE GREAT INVENTION: THE STORY OF GDP AND THE MAKING AND UNMAKING

OF THE MODERN WORLD

Ehsan Masood

New York and London: Pegasus Books, 2016

THE GROWTH DELUSION: WEALTH, POVERTY, AND THE WELL-BEING OF

NATIONS

David Pilling

New York: Tim Duggan Books, 2018

GDP: A BRIEF BUT AFFECTIONATE HISTORY

Diane Coyle

Princeton and Oxford: Princeton University Press, 2014

I spent 19 years working for the Bureau of Economic Analysis—the US government agency

responsible for measuring the nation's gross domestic product, or GDP. Like most medium to large

organizations, the BEA used performance measures to track our agency's performance. After all, in the

words of William Thompson (Lord Kelvin), “when you can measure what you are speaking about and

express it in numbers you know something about it”(Crosby, 1997, p. 225). In 2008, for example, our

agency of about 500 employees was using seven different performance indicators.

How many indicators would we need to track the performance of a nation? Canada decided to

ask its own citizens what needed to be included in an index of well-being. Their responses led to

the development of the Canadian Index of Wellbeing, an index of 64 indicators centered on eight

domains—community vitality, democratic engagement, education, environment, healthy populations,

leisure and culture, living standards, and time use (Pilling, 2018, pp. 236–237). I think most of us would

agree that all these domains are important to the well-being of a nation and its people. Yet, amazingly,

when international comparisons of economic and social performance are made, they most often use just

a single indicator—GDP.

GDP, which measures the value of the goods and services produced by a national economy, is one

of the most widely reported national numbers. In the United States, for example, each quarter private

economists and Federal Reserve banks attempt to forecast the first estimate of US GDP, which is issued

by the Bureau of Economic Analysis roughly 30 days after the end of the quarter. When the number is

finally announced, major newspapers publicize it and analyze its implications on their front pages, and

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