Mis-Measuring Our Lives [Paperback]

This is a very important book. Many people should read it. All who offer evaluations of how people are faring around the world, and every single politician and policy maker, needs to take its recommendations into consideration. The topic at first seems way too specialized for the general reader: why GDP -- gross domestic product, a monetary figure that claims to sum up all the goods and services produced in a country's economy and has reigned supreme as the most cited economic statistic -- is misleading as a straightforward indicator of human well-being. But this brief book is intended for a wide audience.

"Mismeasuring Our Lives" tells us, in clear, concise and non-technical language why GDP is a problematic measure, what other measurements we should use or develop, and why this is so important for all citizens to understand. The book is the report of a commission called together by French president Nicolas Sarkozy. The lead authors, who convened a broad and distinguished international panel of experts, are the Nobel Prize-winning economists Joseph Stiglitz and Amartya Sen, along with Jean-Paul Fitoussi, head of the French center for economic research. They begin by pointing out how much economic activity GDP leaves out, such as the work of a stay-at-home parent or the full benefit of government-provided health care. And GDP can be misleading: rising national output can still leave behind middle and low earners; China, despite authoritarian rule, can appear to be a "better" society than democratic India, if you just look at GDP per capita; France, with more guaranteed vacation time for workers, rates lower than the frenetic U.S.; selling more expensive, gas-guzzling SUVs raises GDP, but at the cost of raising global temperatures and reducing oil reserves.

The report suggests ways to rectify these problems, both using currently available statistics and calling for new measurements. But the commission clearly recognizes that measures of economic performance, particularly the GDP focus on market activity, do not equate to human satisfaction. So they call for a new and extensive move toward better understanding -- and measurement -- of the quality of life. A final third of the book seeks to do the same for sustainability -- how do we improve life for everyone now in such a way that we are not robbing from our children's future? As President Sarkozy points out: "We will not change our behavior unless we change the ways we measure our economic performance."

John Maynard Keynes once said "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." Nowhere is this more true than in the misuse of GDP statistics. If you are a journalist or other writer who uses GDP statistics, you owe it to society to read this book. I am delighted to see prominent economists such as the book's authors paying attention to the problem of misused GDP statistics leading to bad economic decisions.

"Mismeasuring Our Lives" makes the problems of GDP clear. GDP is not necessarily a bad statistic, but its limitations must be kept in mind. GDP is not a measure of prosperity, or of quality of life. GDP says nothing whatever about sustainability. The authors' main point is that when making policy decisions, GDP should never be the only consideration. (Similarly, a checking account balance is useful for determining the prosperity of a household. However, to avoid bankruptcy it is wise to also consider such things as income, expenses, and savings. Paying attention to the checking account balance and nothing else can be seriously misleading.)

The book contains a discussion of adjustments to GDP to make it more useful. There's also a chapter on measuring sustainability. I thought this was fine as far as it went. I was disappointed that nothing was said about Herman Daly's three laws of sustainability. These are: (1) Renewable resources such as fish, soil, and groundwater must be used no faster than the rate at which they regenerate. (2) Nonrenewable resources such as minerals and fossil fuels must be used no faster than renewable substitutes for them can be put into place. (3) Pollution and wastes must be emitted no faster than natural systems can absorb them, recycle them, or render them harmless. I would have liked to see a discussion of measurement based on these. I would also have liked to see more on the implications for policy decisions of using measurements beyond GDP.

As far as writing style, the book is a bit stodgy and academic. However, don't let that stop you. There is nothing here that is beyond an ordinary reader. The book is not very long, only 136 pages.

"Mismeasuring Our Lives" might well be remembered for marking the point in time when GDP (gross domestic product) was consigned to the dustbin of history. Commissioned by the visionary French president Nicolas Sarkozy, a stellar group of economists were tasked with developing a new set of metrics that could more fully assess humanity's economic and social progress. The report has profound implications for policy makers and citizens everywhere.

The Foreword is written by the remarkably perceptive president Sarkozy, who explains his motivations and intentions. Combining keen intelligence with a vision for a more humane and sustainable future, president Sarkozy explains why the blunt instrument of GDP has deluded us into making poor policy choices based on short-term interests. President Sarkozy passionately believes that more sophisticated methodologies are necessary in how we collect and act upon data if we hope to pursue strategies that are meant to improve humanity's collective well-being now and into the future.

The report includes a Preface authored by the commission's lead economists (Amrtya Sen, Joseph Stiglitz and Jean-Paul Fitoussi); an executive summary; three sections (Classical GDP Issues, Quality of Life, and Sustainable Development and Environment); and notes. Graphs and charts are interspersed throughout to illustrate key points. While the committee's report frequently uses the kind of dry and/or qualified language that one might expect, its power is undeniable: the authors have succeeded in sketching out a new paradigm that puts people and the environment on equal footing with corporate profits.

As the world brought to us by neoliberal economics crumbles around us, it is critical that president Sarkozy's project gains attention. I highly recommend this important book to educators, policy makers, activists and concerned citizens everywhere.