Just as in America, in Britain too the story told by official statistics does not always match people’s lived experience. That is especially true in places like Newcastle, a former shipbuilding city, which lost out to competition from Asia in the 1970s and has seen living standards stagnate ever since. The U.S. economy, we are told, is booming. In the past two quarters, gross domestic product has risen by more than 3%, the stock market is soaring and unemployment is down to a 17-year low of 4.1%. Many people, though, don’t feel that upside.The perception gap is huge. Unemployment, more broadly measured, is higher than the headline number suggests because many people have simply given up looking for work or are working in part-time jobs when they want a full-time job. One of the prime faults of GDP is that it deals in averages and aggregates. Aggregates hide the nuances of inequality. And averages don’t tell us very much at all. Barring a few recessions, the U.S. economy has been on a near relentless upward path since the 1950s. Yet according to a Pew Research Center report, the average hourly wage for nonmanagement private-sector work was $20.67 in 2014, a measly $1.49 higher than in 1964, adjusted for inflation.
Studies suggest that people care more about relative than absolute wealth. If that is true, then as a minority have become richer, the majority have grown more miserable. In a famous experiment carried out at Emory University, two capuchin monkeys were put side by side and given cucumbers as a reward for performing a task. When one of the monkeys was given better-tasting grapes instead, the monkey receiving cucumbers became distraught, flinging its now despised reward at its trainer. The problems with using GDP as a barometer go beyond masking inequality. Invented in the U.S. in the 1930s, the figure is a child of the manufacturing age–good at measuring physical production but not the services that dominate modern economies. How would GDP measure the quality of mental-health care or the availability of day-care centers and parks in your area? Even the Belarusian economist who practically invented GDP, had doubts about his creation. He did not like the fact that it counted armaments and financial speculation as positive outputs. Above all, he said, GDP should never be confused with well-being. That suggests we need to find different ways of measuring our success. For the most part, we have become enraptured with a single measure that offers only limited information.