Beyond GDP: How might we best measure what matters in our society?

The following commentary comes from a Moyers and Company blog on "Commonomics: How we can build local economies that work for everyone."

Aggregate counts of economic activity like gross domestic product, or GDP, give all activity equal value. The cultivating of an urban farm, which may involve little paid work and consume few bought materials, is less “productive,” in GDP terms, than paving that farm over.“When grain prices go up, that’s good for GDP but terrible for hunger,” says Joshua Farley, a professor in community development and applied economics at the University of Vermont. ”GDP is an excellent measure of cost; a terrible measure of benefit.”To even start a new conversation, we need new measurements. As the Business Alliance for Local Living Economies (BALLE) puts it, it’s time to start “measuring what matters.”

Farley’s been involved in studies of Burlington, Vermont, using a ‘genuine progress indicator,’ a version of the index of sustainable economic welfare that looks at a community’s overall well-being. There are many variations of these alternative indicators. Though most still equate value with consumption and growth, some include factors that GDP leaves out — like the value of unpaid household and volunteer work — and factor in the cost of pollution, depletion of resources and the consequences of uneven distribution of wealth.

We don’t yet measure the real costs of these problems in the United States, because, for example, we tend to under-price energy, transportation and education and pay no tax on environmental pollution.

According to Robert Reich, former US labor secretary and a professor at the University of California, Berkeley, “A true tally of all that might reveal the value of being more local.”