BDI: A New Measure of Well-Being and Governability

Until the second half of the twentieth century, socio-economic development was almost exclusively identified with and measured by Gross Domestic Product or Net Domestic Product, despite the shortcomings of both these concepts. Simon Kuznets (1934), forefather of national accounts and Nobel Prize winner in economics, stressed more than 80 years ago that GDP is too simplistic to characterize the economy and its development, let alone both economic and social aspects of development together. About a quarter of century later, an extension of this critical opinion came from John Galbraith (1958), another prominent economist. Recently, a brief but comprehensive summary of GDP shortcomings and related problems was presented in a report by the Commission on the Measurement of Economic Performance and Social Progress (Stiglitz et al. 2010: 23–59). The initial presumption directing the Commission’s work was that irrespective of the conceptual and technical shortcomings of the GDP, the overemphasizing importance of production and supply of goods and services stems from confusing means of socio-economic development with its goals, which should be broadly understood as the general (not only material) well-being of people.