SAT Reading - Khan Diagnostic Quiz level 2 - reading 4

There is currently a broad global movement away from

considerations of mere economic success towards a new

public policy goal involving a broader notion of quality of
life. This movement has also spurred a rethinking of which
₅ statistics inform us best about a country’s situation and how

its citizens are faring. For decades, the gold standard was a

macroeconomic indicator: the GDP - gross domestic product,

calculated per capita. This is the most prominent yardstick

that the media, politicians and the public consider when they
₁₀ try to assess how a country is performing. However, this

measure was never meant to be a measure of the welfare of

nations (as its creator Simon Kuznets warned in the 1930s)

and so there is growing skepticism about the GDP’s

usefulness as a measure of national well-being. Slogans such
₁₅ as “beyond GDP” or “redefining progress” challenge the

preoccupation with the GDP.
Three key strategies have been employed to develop a

better measure of well-being: healing the GDP,

complementing the GDP, and replacing the GDP .
₂₀ The first group of initiatives tries to deal with the

downsides of the GDP by attempting to fix the indicator

itself. . .
One key aim of this group of measures is to account for

sustainability and the environmental damage associated with
₂₅ GDP growth. For example, the Index of Sustainable

Economic Welfare and the Genuine Progress Indicator are

both based on the consumption of private households.

However, they also reflect additional social factors such as

household labor and education with a rising value, while air
₃₀ pollution and environmental damage lower the score. As a

consequence, the downsides of economic growth and

modernization ought to be accounted for whilst retaining the

benefits of the GDP, namely a single figure that captures

different entities and is comparable across nations.
₃₅ The second group of measures moves further away from

the GDP as a yardstick than the previous approaches but does

not abandon the sum of goods and services altogether.

Instead, this group of measures seeks to assess national well-

being by complementing the GDP with a number of key
₄₀ social indicators.
For example, the Human Development Index comprises

the three dimensions health, education, and material living

conditions, which are measured by life expectancy, years of

schooling, and GNI [gross national income], respectively.
₄₅ While the method of complementing the GDP with further

indicators is able to overcome the controversial monetization

from which the measures that try to “heal GDP” suffer, the

standardization of different units is also controversial. In

particular, merging different units into a single standardized
₅₀ index is methodologically challenging and again requires

value judgements by the researcher.
The most radical departure from the GDP is embodied by

the third group of measures, which seeks alternative

indicators of well-being without accounting for the sum of
₅₅ goods and services produced in an economy. The logic

behind this approach is that the GDP has always been and

remains a means to an end rather than the end itself.
Famous examples include the Happy Planet Index

calculated by the New Economics Foundation. The index
₆₀ comprises life expectancy, life satisfaction, and the

ecological footprint and is therefore able to demonstrate how

many resources countries need in order to produce a certain

level of health and subjective well-being.
Replacing the GDP altogether is quite a drastic strategy
₆₅ for assessing national well-being, as not only is economic

growth a prerequisite for many of the social goods that make

life enjoyable but the metric of GDP is also highly correlated

with such other factors. Thus, by arguing that the GDP is

only a means to an end, these measures are in danger of
₇₀ making a conceptual assumption that is notable in theory but

can be challenged in practice on the basis of actual causal

mechanisms and empirical data.