Economic experts pondered whether a different and more accurate economic health measurement system than GDP would have prevented the current global financial crisis during a panel at the Center for European Studies last Friday.
Harvard economics and philosophy Professor Amartya Sen and Institut d’Etudes Politiques de Paris economics professor Jean-Paul Fitoussi discussed their research on alternative ways of measuring the success of a society as part of a panel discussion organized by Center for European Studies visiting scholar Éloi Laurent.
Sen and Fitoussi were both members of the Commission on the Measurement of Economic Performance and Social Progress, a 20-person committee called together by French President Nicholas Sarkozy at the beginning of 2008 to determine a better technique to gauge the economic health of a nation.
The two economists presented the commission’s belief that their criteria of looking at income and consumption, happiness, objective measures of freedom, and freedom for well-being would provide a more accurate examination than GDP.
While higher GDP numbers are generally perceived to mean a country is more economically successful, Fitoussi, who joined the discussion through a video conference call, said that socially harmful activities can also lead to an artificial increase in a country’s GDP. For example, he said an increase in road traffic would drive up oil consumption and lead to larger GDP numbers that “obviously misrepresents the social wellbeing.”
While Sen said that these criteria would better measure economic success than GDP, they are not a “substitute for detailed analysis of social and economic conditions.”
He added that the lack of better indicators was not a valid excuse for not predicting the economic crisis.
“This was all evident with existing statistics,” Sen said. “That excuse—that we didn’t have the proper indicators—isn’t sufficient.”
European studies Professor Peter A. Hall and sociology Professor Michèle Lamont joined Fitoussi and Sen in presenting their work on the role of “the collective imaginary”—a group of people who form a perceived community—on “successful societies,” as Hall said.
Laurent said that the discourse between Sen, Fitoussi, Hall, and Lamont was even more “intellectually energetic” than he had expected.
“This was one of the best conferences in the now five years I’ve attended Harvard events,” said Jan Zilinsky ’09, a former Crimson editorial editor.