It's time to retire metrics like GDP. They don't measure everything that matters | Joseph Stiglitz

The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore

The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Will we be able to prosper within our planetary boundaries? Can a modern economy deliver shared prosperity? And can democracies thrive if our economies fail to deliver shared prosperity? These are critical questions, yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.

The standard measure of economic performance is gross domestic product (GDP), which is the sum of the value of goods and services produced within a country over a given period. GDP was humming along nicely, rising year after year, until the 2008 global financial crisis hit. The global financial crisis was the ultimate illustration of the deficiencies in commonly used metrics. None of those metrics gave policymakers or markets adequate warning that something was amiss. Though a few astute economists had sounded the alarm, the standard measures seemed to suggest everything was fine.

If our measures tell us everything is fine when it really isn't, we will be complacent

Joseph E Stiglitz is a Nobel laureate in economics and the co-author of Measuring What Counts: The Global Movement for Well-Being