The criticism on the concept of GNP

It has been very popular, in the last decades, to criticise the very concept of Gross National Product. It’s famous the statement of Rober Kennedy, who said (1968) that the GNP  “measures everything in short, except that which makes life worthwhile”.  This statement has been proposed, in 2016, as discussion theme for the Italian examinations at the completion of high school, the Maturità, more or less equivalent to the French Baccalauréat.

However, Robert Kennedy, probably because he was not familiar with economics, apparently did not understand the meaning of the GNP, that is only a measure of   “the market value of all the products and services produced in one year by labour and property supplied by the citizens of a country” (definition from Wikipedia), without any aim at measuring human development, happiness, freedom, etc.. In the same way, your body temperature can tell if you have an infectious disease, but does not tell anything about your happiness or your instruction.

Other indicators have been provided to measure the human development, for instance we can refer to the worldwide known HDI (human development index), a composed indicator that takes into consideration the GNP, literacy and life expectancy at birth. It’s interesting to note that there is an high correlation between GNP and HDI, does not exist any poor country with high development index.

In the same way, we can note that there is a positive correlation between GNP and life expectancy at birth, in poor countries life expectancy seems to be lower. The country of Shangri-La can be found in Hilton’s romance (1933), but does not exist n the real world.

Another point is worthy be commented. From criticism point of view, it’s commonly said, for instance, that a road accident increases the GNP: this is true, the GNP is increased by the value of the new car, the lost value of the old car is not deducted. This is why it’s called “gross” national product, in theory we could calculate the “net” national product, however the level of integration in national accounting necessary to do so would be extremely more complex, costly and, so invasive to limit the personal freedom.

Some other alternative indicators have been proposed, majority of them is based on subjective parametres, perceived instead of being measured: as things are now, no one of them can be used in economics.