The leading alternative to GDP is languishing over a technical disagreement--with potentially grave consequences

[Jim__]

From phys.org

Many commentators believe that the world should move away from measuring economic success in terms of GDP growth. Yes, growth has brought prosperity and untold riches, but it has had significant negative side effects for the planet, including climate change, pollution and species extinction. None of these are captured in GDP data.

A whole "beyond GDP" movement has emerged over the last several decades, arguing that we should adopt a new way of measuring the wealth of nations. There is an ongoing debate about the best alternative, and many indicators have supporters, such as gross national happiness and the genuine progress indicator.

Yet one stands out as having by far the most buy-in from major international institutions. Known as "inclusive wealth," it expands what we mean by wealth to include things like the natural environment and the abilities of the population. But it comes with a major problem. There's no agreement around how it should be measured, so different institutions publish very different figures. In our view, this is a major obstacle to its mass adoption.

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Inclusive wealth ascribes a value to the assets a nation has produced that generate well-being, and measures how they are changing over time. These assets are:

• Human capital: the knowledge and skills of the population.
  
• Produced capital: goods and services produced by human endeavor.
  
• Natural capital: the sum of all nature-based assets from which humans derive well-being, both now and in the future.
  
• Social capital: the social networks that exist within a society.
  

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