According to a survey released this morning by Scioto Analysis, Ohio economists are split on whether or not GDP is a valuable economic indicator for policymakers. Of 17 economists surveyed, seven agreed that economic policy would improve if policymakers more frequently relied on non-Gross Domestic Product economic indicators, eight disagreed, and two were uncertain.
GDP measures the total output of an economy, but it does not take into account any measure of how that output is achieved. Some economists believe that by using GDP growth as a proxy for economic wellbeing, policymakers end up making inefficient decisions.
Rachel Wilson from Wittenberg University agreed that other economic indicators are more important, writing “GDP was invented in response to the great depression. It is necessary but insufficient. There are other alternatives like the Better Life Index or Genuine Progress Indicator. These other measures put more weight on goods and services that contribute to well-being, such as volunteer work and higher education, and deducts impacts that detract from well-being, such as the loss of leisure time, pollution, and commuting.”
Conversely, some economists believe that GDP should play a larger role in economic policy decisions. Researchers have shown that GDP is correlated with other indicators such as the Human Development Index, which suggests that policymakers might make efficient choices by maximizing GDP.