Just a few weeks ago I attended a concert by a seniors choral society
in my hometown of Badalona, Barcelona. The concert was held in a local church
and was a real success. An audience of 400 spectators with 100 performers and
contributors enjoyed nearly two hours of music within those ancient walls.
It was a wonderful night. I was accompanied by my family and I also
met some long-lost childhood friends. I must admit I was surprised by the
quality of the concert; the energy of the room and how the mystery of the music
made my mind create, imagine and dream.
So how does this relate to GDP?
Well, I’m a typical economist! Although the concert was a great experience,
that brought happiness to many and a feel good factor to the community; I could
not help wondering whether it actually contributed anything to the wealth of the
country.
My mind was restless. Part of my brain told me that the concert did
not create something new and therefore didn’t add to gross domestic product
(GDP). So from a classic economics point of view, it was not adding anything to
our collective national wealth.
But did that matter?
Then I thought a bit more. On the one hand the concert was free, no
entrance was paid, so no income was generated. On the other hand, there was no
waste (good for the environment!) and there was no net increase in economic consumption.
So what was the economic, social or environmental impact of such a
lovely experience?
The conventional definition of GDP is that it improves only when
there is an increase in consumption, in investment, or in government spending,
or when exports show a higher performance than imports. The concert experience
made me think; how important is GDP? Is it a true measure of the wealth of a community
or indeed the wealth of a nation?
No consumption, investment, imports or exports occurred during that
magical event but the connectivity, relationship building, and let’s face it, happiness,
we felt as an audience, will probably last much longer and create a more
powerful experience then buying a new smartphone or by going to dinner. And
isn’t that the real point here?
We’ve evolved as a society to base prosperity and wealth on economic
consumption. This is a mistake of huge proportions and it’s intrinsically tied
to over consumption. So how do we rectify this, and as economists how can we be
part of the solution? I suggest we need to take a closer look at what gets
measured and monitored in terms of GDP, and find ways of adjusting the approach
to be more holistic. As economists we desperately need to understand that the
economy must serve communities and must evolve to help society achieve holistic
wealth through balanced economic, social and environmental prosperity. We need
to defend that and build upon it.
The concert did not probably add much to GDP but, believe me, it
added a lot to happiness and community cohesion.
