Wednesday, October 7, 2009

More on Sarkozy's Happiness Adjusted GDP

In this post about Sarkozy's "happiness adjusted" GDP proposal, Division of Labour's Stephenson makes some of the same arguments that I use in class when covering GDP and national income. Stephenson cites suicides and car-burning carousals in France as examples of things that Sarkozy would not like to see in his "Stiglitz-adjusted" GDP measure. I have relatives in France, I've been there a few times, and I could add to the list of "French annoyances" things such as the high probability of lacking services due to labor strikes, the unavailability of open shops when you need them, dealing with grumpy and over-entitled government employees, relatively small yet expensive home spaces, and the inferior quality and size of their automobiles (I'll stop here).

Obviously, I could easily make a list of many nice things about living in France. This is not the point however. The point is that nobody, not even Nobel winners, can create a "happiness adjusted index" without large amounts of arbitrariness. Depending on how you cherry pick it, you can easily make heaven look like hell or vice versa. A "happiness adjusted" GDP measure would have no credibility whatsoever due to all the politicking that it would imply. Here lies the greatest advantage of simpler measures like GDP: their meaning is straightforward and they're much less susceptible to manipulation for easy political gain.

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