We need better ways to measure well-being

For a moment, let’s ignore the political context of this NYT article (about how incumbents are having difficulty capitalizing on the “strong economy” in this fall’s U.S. election). As ur-blogger Matthew Yglesias points out, there’s something seriously amiss with reporting that describes the economy thus …

… the economy has not looked so good in a long time. … the Dow Jones industrial average has finally returned to its glory days of the late 1990’s, setting records almost daily … glowing economic statistics …

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… and so on, all with the subtext, “Hey, we’re doing great!” — all while burying the followng down in the bowels of paragraph 30:

[F]or many voters, their economic prospects do not feel as great as overall statistics might imply… the wages of ordinary workers … have just started to improve after several years of falling short or barely keeping up with inflation.

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The tens of millions of people lacking health insurance and the steady shrinkage in traditional pensions have also added to the sense of personal insecurity.

OK, then: the economy is doing great, it’s just that, you know, actual people aren’t doing that well.

To most of us, things like middle-class wages, poverty rates, insecurity, and the like — you know, the things that actually have a bearing on people’s lives — aren’t simply a curious side note to the story of how the economy is doing. They are the story. It’s the GDP and the stock market that are footnotes.

Still, most economic reporting seems to abide by the fiction that “the economy” is somehow separate from — and perhaps more important than — the wellbeing of the people who participate in it. To me, that way of thinking falls somewhere in the gray zone between nonsense and stupidity. I mean, if a doctor proclaims a patient in a coma “perfectly healthy” just because she isn’t running a fever, we call that doctor a quack. But if someone says “the economy is robust” just because stock prices or GDP are going up, for some reason we call that person a sage.

To the extent that there’s a real economic story here, it’s that the conventional measures of prosperity — rising GDP, pricier stocks — have become unhitched from most common-sense measures of a human well-being. That seems like a genuinely important point to get across; the first step for developing a better economic barometer is recognizing that the old ones aren’t working that well.