"Is GDP the most reliable and truthful indicator for assessing the development of a state?"

This is probably the dilemma that persuades Sarkozy to start a research on statistical information and measurements about economy and society.

A commission presided by Stiglitz was created in 2008 to discuss and identify the limits of GDP as an indicator of economic performance and social development. The outcome of such inquiry is explained in his report “Mismeasuring our lives: Why GDP doesn’t add up”. The key messages of his work are focused on the need “to adopt a measurement to better reflect the structural changes of economics” and the necessity to shift the attention from production to a measurement of well being.

This need to evaluate the legitimacy of GDP has arisen from the ever-increasing importance given to such index within the political sphere. In fact, in the latest 20 years GDP has gained a leading role in assessing the economic performance of a state and also in influencing policy makers' decisions.

Before going into the details of the topic is fundamental being aware of the information that GDP provides.

Indeed, the gross domestic product can be defined as the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Put simply, is the overall measurement of any economic activities within a state.

Undeniably such guideline has led to a consistent social and economic development in the western world through a continuous update of statistical information. Nonetheless, the coming up of the financial crisis showed the unreliability of this measurement.

In such a context, Stiglitz and his team have investigated the limits of GDP by identifying the essential aspects which are not taken into account by the index.

Indeed, these statistics are not able to provide any information about inequality among social classes. GDP does not define an accurate assessment of the distribution of wealth in a country. An increase in GDP, does not entail a consequent improvement in the conditions of most of the citizens. In other words, even though an average income is recorded, it might still be that most of the people are worse off than before.

Furthermore, no account on quality of goods and services is considered in GDP. In fact, in the index there is no consideration for the technological changes occurred in the latest decades. It’s not only important the quantity produced, but also the quality of the product. This conception may be applied for goods, such as cars and laptops, as well as services, such as education and health services.

A further example claimed by Stiglitz in the understanding of the inadequacy of GDP reflects on traffic jams. Indeed he argues that an increase in traffic is not beneficial for general wellbeing , even though the consumption of gasoline, and consequently GDP, is increasing. By means of it, we can understand the importance of many other factors in the assessment of well being and social progress, such as environment.

Throughout the writing of this report, the Commission has delineated the key dimensions that should be taken into account for defining wellbeing and can be reassumed in 8 essential parameters:

- material living standards (income, consumption and wealth)
- health
- education
- personal activities (including work)
- political voice and governance
- social connections and relationships
- environment
- insecurity in economic as well as physical nature

In conclusion, the executive summary of “mismeasuring of lives: why GDP doesn’t add up” is a useful reading to understand all the fields not taken into account by the GDP measurement. Well being and social progress are not just defined by the output of production, but instead also by the quality of goods and services and their impact on our lives. An alternative indicator able to better describe well being may be, for example, HDI (Human development index) which takes into account literacy, life expectancy as well as GDP pro capita and would be able to provide a wider and more defined picture of the development of a country.