The GDP: Great Deal? or Grossly Destructive?

Regardless of the state of the U.S. economy (scarier than a slasher film or riding the roller coaster up another high), discussing issues of economic health and how we measure it are always relevant to students.

Like many other countries, the U.S. measures its economic health primarily by the GDP.

The GDP (gross domestic product) is “the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.” It doesn’t include income earned abroad. Source: InvestorWords.com

The GNP (gross national product) is the GDP plus “the income accruing to domestic residents as a result of investments abroad, minus the income earned in domestic markets accruing to foreigners abroad.” Source: InvestorWords.com

The primary impetus with the GDP and GNP are growth, growth, growth. Most people believe that economic growth is good, and healthy, and desirable.

But, what counts as economic growth?

A 1995 article from the magazine The Atlantic, “If the GDP is Up, Why is America Down?” (old, but still very relevant) explores the impact of the GDP on U.S. society and offers suggested alternatives for measuring its health and well-being. As the article says,

"The GDP is simply a gross measure of market activity, of money changing hands. It makes no distinction whatsoever between the desirable and the undesirable, or costs and gain. On top of that, it looks only at the portion of reality that economists choose to acknowledge -- the part involved in monetary transactions. The crucial economic functions performed in the household and volunteer sectors go entirely unreckoned. As a result the GDP not only masks the breakdown of the social structure and the natural habitat upon which the economy -- and life itself -- ultimately depends; worse, it actually portrays such breakdown as economic gain."

Divorce? Up goes the GDP. Oil spill? Up it goes. Cancer? War? Crime? Layoffs? Environmental destruction? Up it goes.

Certainly some type and amount of economic growth is necessary, but there are some people who believe that there need to be different, better ways to measure the health and well-being of our society. They advocate using “alternative progress indicators,” focusing on the value of things like volunteering, good health, happiness, sustainability, safety, etc. Two examples include the highly-lauded Genuine Progress Indicator created by Redefining Progress and the widely-reproduced regional indicators used by Sustainable Seattle.

Much attention has also been given to the concept of “Gross National Happiness” promulgated by the country of Bhutan, which focuses on happiness and well-being as essential indicators of the country’s health and wealth.

Two video resources that can help spark discussion about the GDP include a brief video PSA produced by Adbusters, and a video featuring Robert Kennedy’s speech 40+ years ago challenging the way Americans measure wealth and progress, created by the Glaser Progress Foundation. (You can also find several suggested articles about the GDP and alternative economic indicators on Glaser’s website.)

IHE offers a free downloadable activity about the GDP: Is What's Good for the GDP Good for Me? (PDF) that increases student awareness about the Gross Domestic Product (GDP) and what it measures, introduces them to alternative indicators and encourages critical thinking about what factors contribute to a healthy, sustainable, stable economy. (It's recommended for grades 8 and up and takes about 60-90 minutes.)

In this time of economic uncertainty, it's important that we think critically (and help students to do the same) about how our money is being used and how "growth" is determined, and that we search for tools that accurately reflect, reveal and support the kind of healthy, humane, sustainable world we want.

~ Marsha