This article was originally published on Fortune.
“…On the first point, we desperately need to change our overall economic frame of reference. For 75 years, the world marched to the beat of the drum called Gross Domestic Product (GDP). Now, we need a new instrument. GDP gained traction when economies were primarily seen as vehicles for mobilizing wartime production. Yet today’s economies are expected to serve an entirely different purpose: maximizing wellbeing and sustainability.
It is time to consider a new approach. A group of economists from the private sector, academia, and international institutions, including Diane Coyle and Mariana Mazzucato, has already been working on alternate measures and ways to correct for the failings of GDP. Their Wealth Project, which evolved from efforts initiated by the World Bank, has offered a number of proposals for how we can move forward.
For example, one quick fix is to adopt a measure like median income per capita, which better reflects the economic conditions real people face. A more ambitious measure is “natural capital,” based on a country’s ecosystems, fish stocks, minerals, and other natural assets. Because this balance sheet would also need to include human capital, we could incorporate all of the relevant elements in one composite scorecard…”
Read on at: Fortune.