Should GDP measure happiness?
Smiley face on a hand.
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Kai Ryssdal: French President Nicolas Sarkozy brings his campaign for greater stability in food prices and global currencies to Washington this week. Sarkozy met with President Obama today, trying to get the United States to sign on to his priorities as head of the Group of 20. The meetings are going to be in France later this year.
The French and some other Europeans have another thing they want to get done, too, one that doesn't necessarily involve getting American support. They're talking about revamping the way Gross Domestic Product is measured, that granddaddy of all economic indicators.
Sarah Gardner reports from the Marketplace Sustainability Desk.
Sarah Gardner: Robert F. Kennedy once said that GDP measures everything "except that which makes life worthwhile." GDP gives us the market value of goods and services countries produce every year -- but little else.
Carol Graham is a Brookings fellow. She says the recession -- and a big push from Sarkozy and British Prime Minister David Cameron -- have made the GDP "makeover" debate legit.
Carol Graham: The fact that there was a pretty major session at the American Economic Association on "Beyond GDP," which 10 years ago would have been impossible, is already a sign of where the debate is.
Critics of GDP say it's a limited tool. A spike in gasoline consumption, for example, is good for GDP, but may mean dirtier air and traffic. But Graham thinks measuring things like happiness goes too far.
Graham: I don't think we have enough agreement on what happiness is.
But Britain, France and Canada all want to start measuring "well-being," if not happiness. That means factoring in things like health and leisure time. Stanford economist Peter Klenow warns it won't be easy.
Peter Klenow: When we're looking at stuff like leisure, we're really worried that there are differences in preferences; across people within an economy definitely. It's even conceivable that people develop different languages in different countries, why can't they develop different preferences for how much time they work versus how much time they spend with their family?
The new formula is likely to be a separate index that complements rather than replaces GDP. And it could better indicate, as Robert Kennedy hoped, "whether we are proud to be Americans."
I'm Sarah Gardner for Marketplace.