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Kate Sheppard is a writing fellow at the American Prospect.

Kate SheppardMarch 30, 2008 5:00 PM

In 1968, Robert Kennedy took up the question of whether the gross domestic product was an adequate measure of how well the United States is doing. "Our gross national product counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them," he told a crowd gathered at the University of Kansas. "It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl."

In addition to including as positive contributions many elements that are destructive to the environment, health and peace of the world, Kennedy argued, GDP also does not account for income disparity, health or quality of life in its assessment of societal wellbeing.

In the 40 years since Kennedy made that speech, our GDP has ballooned from $800bn to nearly $14 trillion. But can we say that the majority of Americans are as exponentially better off as those figures would have us believe? A glance at just a few recent statistics on prosperity, equity and health would indicate otherwise: Median family income has declined 2.6% annually since 2000, and the cost of healthcare premiums has increased 78% since 2001. In the early 1980s, the wealthiest Americans lived 2.8 years longer than the poorest, yet by 2000, the gap had increased to 4.5 years, and it continues to grow. One in 100 adults, and one in nine black men between the ages of 20 and 34, are in prison. The poverty gap between black and white Americans is 24%, and blacks are three times as likely to live in extreme poverty.

And those are just the concrete figures. They don't even begin to look at less tangible concerns, such as the degree to which the country remains deeply segregated by race and class, the ever-increasing amount of carbon we pump into the atmosphere, the decline in civic engagement and our all-but-eliminated leisure time. When Nobel Prize-winning economist Simon Kuznets developed the idea of the concept of GDP back in the 1930s, he cautioned that it should not be construed as a valid measure of wellbeing or the overall economic state. Yet it has become the catchall marker for policymakers and the press.

Given the failures of this figure, are there other means of calculating national wellbeing? It's a question that the Senate commerce committee's subcommittee on interstate commerce, trade and tourism took up recently, as chairman Byron Dorgan convened a panel of experts to discuss the issue. At the hearing, Karen Davis, president of the health policy advocacy foundation the Commonwealth Fund, noted that in the current breakdown, a heart attack is accounted as a net gain for GDP, since all the health and service expenses related to it would put money into the system. And since it does not take into account relative income, it also does a poor job of accounting for inequity, as witness Robert Frank, a professor of economics at Cornell University argued. Since the 1970s, income growth has been almost entirely confined to the highest earners.

Yet devising a feasible and relevant alternative tool proves challenging. As Dorgan pointed out at the hearing: "Who knows what happiness is?" After all, everyone has known someone whose financial or personal circumstances are significantly worse than our own, yet they project an enjoyment of life far greater. Any tool to replace or supplement GDP would have to be based on concrete indicators and not merely subjective concepts. At the hearing, Bureau of Economic Analysis director Steven Landefeld recommended bringing together epidemiologists, physicians, geologists and engineers to devise a different tool, which could be a start.

Others have already taken up this question. Bhutan, for example, has adopted a "Gross National Happiness" assessment, which includes the economic, physical, mental, political and environmental health of the populace. But this system imposes quantitative values on mostly qualitative ideas, and it has been criticised for not taking into account the thousands of Nepali-speaking citizens that have been forced out of the country over the years, which reveals the degree to which a tool like this would be vulnerable to the manipulation of political leaders.

The United Nations' Human Development Index represents perhaps the most comprehensive attempt to synthesise economic and non-economic measures into a single national success metric currently available. It includes life expectancy, literacy and purchasing power, along with traditional GDP. In last year's ranking, the United States was 12th, and none of the top five nations in total GDP made it into the top five. Here in the United States, the economic policy think tank Redefining Progress has proposed a "Genuine Progress Indicator" that takes into account both the costs of economic activity and the benefits of growth, as well as income distribution, civic engagement, crime and pollution, another possible model the country could adopt.

There's no legislation in Congress right now to get work on an alternative measure underway, but it appears to be something that Dorgan is contemplating. If and when he does, it will be a step the country should have taken four decades ago when Kennedy first broached the subject.