GDP is the Wrong Measure of Well-Being for Millennials
The fifth annual MetLife survey of American value ideals shows a significant shift from prioritizing achieving professional success and material wealth to having a greater sense of personal fulfillment, particularly among younger generations. Millennials preferred a sense of personal fulfillment over having enough money by a margin of 28-20. Nearly a third of Millennials surveyed thought it was more important to have close family and friends than a roof over their heads. And, they had the highest percentage of respondents who said achieving the American dream in their lifetime was important but did not look to traditional markers (like a house, getting married, etc.) to achieve it.
Yet, at the same time, our economic accounting systems cannot accurately depict this transition towards quality over quantity. Our main measure of economic welfare, the Gross Domestic Product, sees growth as the only indication of progress. If GDP goes up, indicating more economic output, the economy is doing well. If GDP goes down, policymakers and markets worldwide begin to worry. But, what is GDP really measuring?
A new report from Demos, Beyond GDP, addresses the shortcomings of GDP and challenges the way we measure our economic growth, and in turn our overall progress. Beyond GDP highlights the failure of GDP to accurately reflect the health of our economy by not counting many goods – such as at home child care, education, and volunteerism – and not counting many bads – such as the costs of pollution and the negative economic impact of income inequality.
GDP also cannot reflect the difference between quality and quantity. Economic activity from hurricane clean up is counted just the same as increased manufacturing output, even though one is clearly better for society overall. And, it cannot reflect the gains from personal fulfillment unless there is a monetary value. Due to the heavy reliance on GDP as a measure of economic, and in turn social, well-being, there is no incentive to encourage personal fulfillment because it would likely show a decrease in spending and, therefore, a decrease in GDP.
The inability of GDP to reflect larger social trends is shown through a set of infographics accompanying the report. The infographics show that while there has been a constant increase in growth, there has been little increase in median income, a drop in pension plan participation, and increasing rates of poverty. The infographics also show that while GDP has been increasing, social health is on the decline, incarceration rates are increasing, and our use of resources is increasing at an unsustainable rate.
As priorities start to shift away from material wealth, GDP will become an even poorer metric of well being and we will need to adopt new metrics to more accurately reflect economic and societal priorities.
Photo Credit: Demos