What's the Latest Development?
Most of the world's advanced economies are highly indebted and scrambling to create economic growth just to balance their books. But the imperative of growth doesn't necessarily advance the world's long-term interests, says Kenneth Rogoff, a Harvard economics professor and former chief economist of the IMF. In recent years, broader measurements of national welfare have been advanced, such as life expectancy, literacy and happiness. Such metrics are not always heavily influenced by GDP growth.
What's the Big Idea?
In advanced economies, where the political imperative for growth is currently strongest, benchmarking behavior stunts the effect of economic growth on individuals' well-being. In other words, income level relative to others' affects welfare. This benchmarking behavior "may well imply a different calculus of the tradeoffs between growth and other economic challenges, such as environmental degradation, than conventional growth models suggest," says Rogoff. He argues for a realignment of growth among our other priorities.
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