Economists just want you to be happy

The Thin Green Line SFGate 15 Sep 09;

The Nobel-winning economist Joseph Stiglitz has authored an important new study proposing new, and ultimately more accurate, ways of measuring a country's wealth.

The very formulas for measuring growth and prosperity turn out to be biased such that environmental protections will always look like short-term caps on growth, when, ultimately long-term growth and survival depend on preserving our natural resources.

GDP has long been an inaccurate measure of a country's prosperity: It can make countries like Malaysia which are tearing through their natural resources look wealthy, when in fact, they're enjoying a short-lived bubble. The American model, as we're seeing now, of buying on credit turns out to be unsustainable in its own way. Stiglitz explains:

In the years preceding the crisis, many in Europe, focusing on America's higher rates of GDP growth, were drawn to the US model. Had they focused on metrics such as median income — providing a better picture of what is happening to most Americans — or made corrections for the increased indebtedness of households and the country as a whole, their enthusiasm might have been more muted.

If the proposed models get wide use, they will take pressure off developing countries to ravage their environments, as China continues to do, in order to achieve the growth which is fetishized by international bodies.

The new models would also bring good things on a more personal level. The GDP works like an average, rather than a median, and doesn't have any gauge for income disparity. And, as it turns out income disparity matters: Countries with a smaller gap between rich and poor generally have better health outcomes and higher happiness ratings. The U.S. ranks poorly on the first and so-so on the second. The principal is that, confronted with people who have so much more than you do, you will experience stress and dissatisfaction.

The new study would also credit leisure time. As my friend Luke says, the only measure of rising standard of living is how much less we have to work to reach the same point. By Luke's Rule, the U.S. fares quite poorly. Indeed, Stiglitz offers his own version of the rule: "Our economy is supposed to increase our well-being. It, too, is not an end in itself."

Perhaps not coincidentally, the study was commissioned by Nicolas Sarkozy, the president of France, where meals and vacations are famously long.

Read more: http://www.sfgate.com/cgi-bin/blogs/green/detail?entry_id=47658#ixzz0RE6qZrXW