Monday, September 28, 2009

JOSEPH STIGLITZ: WE ARE NOT OUR GDP

Ruth Calvo, Seminal - Joseph Stiglitz, the Nobel Prize- winning economist, urged world leaders to drop an obsession with examining gross domestic product and focus more on broader measures of prosperity. So many things that are important to individuals are not included in GDP," said Stiglitz, a Columbia University professor. "There needs to be an array of numbers but we need to understand the role of each number. We may not be able to aggregate everything together.". . .

Assessing government's contribution to economic output, which ranges from 39 percent in the U.S. to 48 percent in France, is one of the shortcomings of the GDP model, as is its difficulty in estimating improvements in quality of products such as cars instead of just quantity, Stiglitz said. Similarly, increased household debt may drive up output numbers, whereas that doesn't amount to a real increase in wealth, he added. . .

"Most governments make a fetish out of it. If you take one message out of our report, make it avoid GDP fetishism," he said. . .