Whenever you read a report or hear on the news that the economy is growing, what you are hearing is that the Gross Domestic Product (GDP) is growing. But while GDP measures economic activity, it does not measure the distribution of the wealth created by that activity, or the quality of our air and water, or the quality of our schools. Yet, when we hear GDP is growing many of us believe that the country is doing better than it was. Given that economists, politicians and the media treat GDP this way, it is no surprise that we think this way.
In the wake of the 2007 economic crisis, state governments and some economists are pursuing a renewed push for alternative measurements of our national well-being. Recognizing that persistent unemployment coupled with economic growth reveals the divorce between the GDP and our general welfare (a point already recognized by the developer of GDP), alternatives to GDP are becoming more fashionable.