WEEKLY LISTENING - Pt.2

The Health of Nations (Ep. 26)

When economists talk about the standard of living in different countries around the world, they use a term GDP. The economists have been using this term for decades which means we use it too even though a very few people know what it truly means. So what exactly does GDP stand for? GDP(Gross Domestic Product) is a total market value of all the goods and services produced within a country over a year.It does sound like a realistic way to do so but Martha Nussbaum would rather use something that actually works. Nussbaum is a philosopher by training and a professor of law at the University of Chicago. In her new book, Creating Capabilities: The Human Development Approach, she argues that we should listen less to economists who scalper GDP as a valuable measure of human welfare and look at all the things that GDP fails to capture.Martha is not an economist but has been collaborating with the Nobel laureate Amartya Sen to find a smarter and fairer way to measure living standards around the world.

Martha Nussbaum says that GDP is a very obtuse measure. She believes that the problem with GDP is that the profits of foreign investment often go out of the country back to the investing country, and so GDP doesn’t even tell us what’s happening for those people in that country.GDP doesn't tell us the miserable side of the people they are living, we want to know about what people at top are doing and what people at bottom are doing.South Africa being under apartheid did very well in the development tables,there were inequalities in health and education but it turns out that GDP is not correlated with those important things whether improving GDP translates into improvements in health and education.But it turns out that actually doesn’t. She thinks its not a good proxy for alot of those things that are actually important to people.

Working with Amartya Sen, Nussbaum has been working on to develop a new framework for assessing and increasing human welfare around the world.She admits that the Human Development Index(HDI) is hardly perfect as it is not a simple thing to quantify freedom and well-being.But still Nussbaum feels it does a better job than GDP because HDI atleast pays importance to things like healthcare and education.

In this podcast she also talks about quantifying happiness and her quarrels with her economist colleagues at the University of Chicago and how she likes to relax at the end of her day by singing.