The term Gross Domestic Product or GDP was coined by Simon Kuznets for a US Congress report about forty years earlier in 1934. In the same report Kuznets warned that this measure was a poor measurement for economic welfare. It ignores economic inequality and as well as any psychological and social dynamics of welfare. Nevertheless, GDP per capita (total production divided by the number of people) became the dominate measurement for economic welfare, wellbeing, and progress the world over.

Let’s look at why GDP was adopted so broadly, and why no it seems to no longer makes much sense in advanced economies. Is the GDH a good alternative? Could there be other alternatives? I will present my own alternative, a new Buddhist Economics metric: Gross Domestic Suffering or GDS.

By looking at the reasons why GDP came to prominence will give us a better understanding of how to replace it with something better.

GDP is much easier to calculate than GDH. A room of economists can simply tabulate one of the three statistical aggregates: total production, total income, or total expenditure. The GDH on the other hand is a survey of seven wellness factors including physical, workplace, environmental, etc that takes 7 hours to complete measuring the “happiness” of a single person. The GDP is easy to interpret; its just one number. However the results the GDH are tabulated into a complex and multifaceted report. GDP might seem sort of irrelevant for advanced economies, but was not a terrible measure of economic growth and even a decent proxy for wellbeing when it was created.

The term Gross Domestic Production suited its purpose when it was created and still largely works for poor countries. In 1934 when Kuznets coined the term the US was recovering from a terrible economic depression and needed metrics to quantify the impacts of centralized economic programs like the New Deal. The New Deal was very expensive, and it was very important to understand if it was working. Moreover “increased wellbeing” was pretty straightforward back then. A slew of wonderful mechanical and electrical machines including household appliances, lights, telephones, washing machines, refrigerators, water heaters, etc had been invented and just needed to be spread around. The faster these appliances were distributed and wired up to an electrical grid, the better.

Developing and third world countries today are in a similar situation. Their governments generally need a measuring rod for their modernization efforts. Also, just like America in the 1930's all the appliances, electricity, and now telecommunications are invented and economic development really is just distributing them to people. Anyone who wants to argue that this “doesn’t really increase their welfare” should consider among many other examples that laundry machines allow a new generation of women around the world go to school instead of hand washing clothes.

Developing countries today universally use a more modern form of the GDP called the Human Development Index or HDI which is published by the UN and is slightly better than the GDP since it measures roughly wealth, education, and health.

HDI = GDP + Literacy + Life expectancy

HDI is easy to calculate with standard national statistics, but it does not provide substantially more insight into psychological or social wellbeing like the GDH.

GDP (or even the HDI) no longer seem to measure economic wellbeing in advanced economies. Why is this? Remember that in poor underdeveloped countries economic growth boils down to distributing existing appliances and building out access to education, healthcare, and telecommunications. In advanced economies these things are already (largely) built out and (more or less) distributed. Hence, in advanced economies, no one knows what the next step in our economic development will be, whether its artificial intelligence algorithms or personal robots or something we can’t predict, and we know that in advanced economies wellbeing increases dramatically when there is a better distribution of the wealth we already have.

Gross Domestic Happiness presents itself as an alternative, but it has problems. I mentioned before that GDH is hard to scale to a national level because it would take tens of thousands of hours to survey a sample.

What GDH reveals is hard to translate into concrete improvements. If you find out that people are socially unhappy because they are not forming and maintaining meaningful relationships, now what? How do you translate that into an improvement? You have to research why people are not forming and maintaining relationships. What if you find that its because people move a lot. Are you going to make moving illegal or tax it? Or what if you find its because they are on their cell phones too much? Are you going to ban or tax cell phone usage in some way? No.

Finally, the GDH is really not that Buddhist. Strange as it may sound, Buddha teaches the reduction of suffering, and only as a consequence thereby the increase of happiness. Trying to define happiness objectively and then cultivating it is not what the Buddha proscribed. He did exactly the opposite by defining suffering and trying to reduce it.

As Buddhists our economic policies should aim to reduce suffering.

So what would Gross Domestic Suffering look like? Can we build one right here and now? Let’s start with a baseline of suffering.