Ross Gittins has a piece in The Age on obesity.
As measured by gross domestic product, obesity is a win-win-win situation. The more you eat the more you add to GDP and the profits of businesses. If the messages of advertising and marketing make you self-conscious about your overweight, everything you spend on fancy diets, gym subscriptions etc adds to GDP.
And then when you damage your health, everything you, the government and your health fund spend on trying to keep you going adds to GDP. Even when you die prematurely that won’t count as a negative against GDP, although the absence of your continued consumption will be missed.
Gittins is trying to make the point that GDP is a faulty measure of progress. I agree – GDP is not meant to measure progress and well-being and happiness and all the good things that people would like to see measured. True it can serve as a proxy for all those things, but it is a very inaccuarate proxy.
GDP is an accounting measure of production and should be seen as such. As with all measurements it suffers from various defects; government spending goes in at cost, potato chips are valued equally with computer chips, and so on. High levels of aggregation mask important variations across the economy. Nonetheless, it is an important consideration when evaluating policy outcomes. As Lord Kelvin suggested without measurement our knowledge is meagre and unsatisfactory, but that doesn’t mean that with measurement that our knowledge is complete. In many instance GDP as a measure works well and often works better than competing measures, but nobody should under the illusion that it always works as well as we would like.
Update: Julie Novak has a comprehensive discussion here.