What is Prosperity and How Do We Measure it?
AEI Development Policy Outlook, No. 3, 2009
7 Pages Posted: 23 Oct 2013
Date Written: October 27, 2009
A year ago, French president Nicolas Sarkozy created the Commission on the Measurement of Economic and Social Progress. Sarkozy believes that economic growth, as measured by the gross domestic product (GDP), is not a sufficient measurement of our well-being. He has a point. While GDP encompasses myriad economic variables — broadly representing a nation’s income and, hence, economic progress over time — it fails to capture important ingredients of prosperity, such as health, personal freedom, and security. The Sarkozy commission has issued its first report, but it fails in some crucial respects.
The London-based Legatum Institute’s Prosperity Index goes a long way toward addressing the concerns Sarkozy has about broader measures of well-being. The Index, now in its third year, assesses a wide variety of economic and social indicators for most of the world’s population and ranks countries according to their performance.
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