Criticism of Survey: What GDP Cannot Measure


Status: 01/14/2022 10:46 a.m

The gross domestic product includes the goods and services generated. However, looking at the euro and cent ignores other factors that are important for prosperity.

By Hans-Joachim Vieweger, ARD Capital Studio

It may be that the numbers after the decimal point are only of interest to experts. But whether the economy is down almost five percent – like in 2020 because of Corona – or whether the economy can recover by 2.7 percent – like last year – that has consequences for many.

Increase in importance since the 1940s

“There is hardly a number that has such an impact as gross domestic product, and with it growth,” says Philipp Lepenies from the Free University of Berlin. The scientist has written about “The Power of One Number”. Power mainly because of the high importance for politics. A look at history shows this: Economic statistics only emerged from the niche of specialists when the US government during the Second World War became interested in how the war economy could be financed. People wanted to know how the economy was developing and needed figures for this.

The experiences from America were transferred to Germany after 1945, explains Lepenies. “But that shaped the generation of my grandparents, where you could clearly say and show how life had improved in the 1950s, from a two-room apartment with a radio to a single-family house with a car and trips to Italy. ”

Growth can also have negative consequences

According to Lepenies, the idea that “more growth equals more prosperity” was appropriate at the time. However, it cannot simply be transferred to the present day; after all, growth can also have negative consequences. An assessment that has also found its way into politics. This is also the case in the coalition agreement of the traffic light government: SPD, Greens and FDP want to expand the welfare measurement – without diminishing the importance of the gross domestic product.

“An economy without gross domestic product would have huge analysis problems,” emphasizes Green State Secretary Sven Giegold from the Federal Ministry for Economic Affairs and Climate. “But the GDP is just not useful to measure whether people can live in prosperity, whether nature is doing well, whether society holds together.” According to Giegold, the gross domestic product is not the only salutary factor for all of this.

New factors for the calculation

The standard example of economists is the car accident: great damage for the individual, but statistically a gain. Because both repair costs and medical bills are included in the calculation of the gross domestic product. Conversely, positive effects such as unpaid work or the preservation of nature are not included in the figures. In the future, therefore, further factors will be included in the annual economic report in order to say something about the development of prosperity.

“Of course, this federal government will also consider the development of the gross domestic product to be an important factor. It is also important to us that people have a good life – and that also includes material prosperity,” State Secretary Giegold clarifies. “But at the same time we are looking at other factors. We will also look at how we protect the climate and whether social inequality is increasing or decreasing.”

The political scientist Lepenies also believes that such an expansion of factors for measuring prosperity makes sense. But that doesn’t make it any easier: “In many areas that would be important for measuring prosperity, changes may only become apparent decades later, or maybe even later,” says Lepenies. Of course, that is another reason for the great importance of gross domestic product, which is not only easy to calculate, but is also quickly available – for politics and business.

The GDP – meaning and criticism

Hans-Joachim Vieweger, ARD Berlin, 14.1.2022 09:50 a.m

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