- Person
- Joseph Stiglitz
- Lived
- b. 1943
- Field
- Economics
- From
- American
The story
Gross domestic product is the standard measure of how an economy is doing. It adds up the value of what a country produces, but it says little about how ordinary households are faring, how income is shared, or whether today's growth is using up resources that future generations will need. Joseph Stiglitz, who won the Nobel Prize in 2001 for showing how markets can fail when information is imperfect, was asked to lead an international effort to look beyond it.
In February 2008 the French government, under President Nicolas Sarkozy, created the Commission on the Measurement of Economic Performance and Social Progress and named Stiglitz as its chair. The Nobel laureate Amartya Sen served as economic adviser and the French economist Jean-Paul Fitoussi as coordinator, which is why it became known as the Stiglitz-Sen-Fitoussi Commission. It held its first plenary meeting in Paris on 22–23 April 2008 and organised its work into three working groups, on classical GDP issues, on quality of life and on sustainability.
The commission drew a clear line between two questions. The first is how well people are living now, which depends both on economic resources such as income and on non-economic aspects of life. The second is whether that level of well-being can last, which depends on whether stocks of natural, physical, human and social capital are passed on to future generations. Rather than offering one replacement index, the report set out guidelines for building a broader dashboard of indicators.
The final report was made public on 14 September 2009 and was later published as a book, Mismeasuring Our Lives: Why GDP Doesn't Add Up. The organisers also issued a further contribution addressing the financial crisis that had begun in 2007. Statisticians soon began applying it. In 2011 France's statistical institute INSEE used the commission's criteria to compare France with similar countries and found that indicators of living conditions, such as health, education, unemployment, poverty risk and security, revealed much sharper contrasts between countries than measures of income alone.
Stiglitz went on to co-chair the commission's successor, the High Level Expert Group on the Measurement of Economic Performance and Social Progress, and in 2019 he co-authored Measuring What Counts: The Global Movement for Well-Being. The idea that governments should track people's well-being and the sustainability of growth, not just output, has since become part of mainstream debate about how to judge whether societies are really making progress.
Why it matters
The commission’s work helped launch a global movement to measure well-being, not just output, when judging whether societies are making progress.
About Joseph Stiglitz
Nobel economist from Gary, Indiana, who showed how imperfect information distorts markets, led the World Bank’s research and became a leading critic of inequality.
More about Joseph Stiglitz
- Joseph Stiglitz named the Henry George theoremJoseph Stiglitz showed that the ideal supply of local public goods can be funded entirely by taxing the land rents those goods create, calling it the Henry George theorem.
- Joseph Stiglitz won a Nobel for the economics of informationJoseph Stiglitz shared the 2001 Nobel economics prize for showing how markets work when one side knows more than the other, including how insurers screen customers.
- Joseph Stiglitz explained why unemployment persistsIn 1984 Carl Shapiro and Joseph Stiglitz published a model showing how employers’ difficulty monitoring workers can keep wages high and leave some people unemployed.
- Joseph Stiglitz marched for civil rights in 1963As student council president at Amherst, Joseph Stiglitz joined the March on Washington and organised an exchange with a small African-American college in the South.
- Joseph Stiglitz founded a think tank on developmentIn 2000 Joseph Stiglitz founded the Initiative for Policy Dialogue at Columbia University, and since 2005 he has chaired Manchester’s Brooks World Poverty Institute.
Sources
- Joseph Stiglitz Wikipedia
- Commission on the Measurement of Economic Performance and Social Progress Wikipedia
- Recommendations of the Stiglitz-Sen-Fitoussi Report: A few illustrations INSEE
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.