Should we include happiness in how we measure the economy?
Counting Error
Let’s face it. Gross Domestic Product (GDP) is the most accepted measure of national economies, but hardly an accurate one. It leaves out so many variables that it shows many countries to be richer or poorer than they really are. GDP ignores the depreciation of capital, be it disappearing forests or ageing labourers, says Romina Boarini, an economist at the Organisation for Economic Co-operation and Development (OECD). And GDP nonsensically goes up after a natural catastrophe. When an epidemic spreads and people spend on medicine, it goes up again.
(This story appears in the 23 October, 2009 issue of Forbes India. To visit our Archives, click here.)