Week 1: Lecture 2: Beyond GDP Flashcards
How Did GDP Become the Primary Measure of Economic Successs ?
Developed in 1934 by Simon Kuznet, but during World War II, the demand for national income statistics increased, and by the 1960s, GDP targets became central to government policy, making it a primary measure of economic health.
What Impact Has GDP Had on Policy and International Relations?
GDP serves as a key success indicator that influences:
- government spending
- creditworthiness,
- international rankings.
- foreign aid; for instance, Ghana received less aid after a recalculation showed an increase in its GDP.
Give an example of where GDP gives a false impression of the wellbeing of a country ?
In the EU: average income is lesser than the US, but an average of bottom 50% in us is lower than in EU.
What Is Jevons Paradox, and How Does It Relate to GDP?
Jevons Paradox states that increases in productivity don’t lead to less resource consumption; instead, they often lead to greater demand. This contradicts the idea that efficiency improvements alone can reduce overall consumption.
What Are the Main Alternatives to GDP for Measuring Progress?
1: Genuine Progress Indicator (GPI): Adjusts economic measures by factoring in social and environmental costs.
2: Inclusive Wealth Index: Tracks comprehensive wealth, including natural, human, and produced capital.
3: Human Development Index (HDI):: (GNI Index, Education Index, Life expectancy Index)
4: OECD better life initiative: (adjustable, country can choose metrics. )
5: Happiness Index (evaluative, “ladder”, Happiness report)
6: Sustainable development Goals
7: Dougnut economics
8: Happy planet index = life expectancy x experiences wellbeing / ecological footprint
What Are the Benefits and Drawbacks of Using a Dashboard vs. an Index?
Dashboards (OECD better life initiative for example)
+ allow users to see trade-offs between different metrics, providing a more nuanced view of progress,
- but can be selectively presented by companies and countries to highlight favorable data while downplaying others.
Why Consider Both Objective and Subjective Indicators in Well-being Measures?
**objective: **
Example: income
benefits: allows to compare countries
**subjective: **
Example: happiness,
benefits: reflects personal perspectives
= both combined = complete understanding g well-being
Why Is It Difficult to Establish a Common Beyond GDP Framework?
- countries are measuring their own metrics
- no standardized guidelines
—> makes it diffuclt to compare measures or achieve instiutionalisation at a global scale
How Are Countries Adopting Beyond GDP Frameworks?
+ indicator dashboards, focusing on common themes like economic stability, cultural participation, and environmental quality
- though scientific clarity and comparability are still lacking
What is needed to switch beyond GDP, acoording to the ‘instuturional change theory ?’ Give an example of each.
1:Technical infrastructure: to get there : common concepts, norms and language (E.g: HDI measured)
2: Governance: To get there: implemented technical infrastructure (E.g: 1.5 binding target law)
3: Policies: To get there: implemented governance (E.g: no more planned obsolence)
What is the wise framework
Beyond gdp framework, measures through different indexes and dashboards:
wellbeing (e.g HDI, Life evaluation index)
inclusion (e.g Gini, gender development index)
sustainability (e.g ecological footprint, comprehensive wealth)
