What is an Economy For?

In a June 2010 article for the Harvard Business Review (“You Are What You Measure”), Dan Ariely refers to psychologists and economists who demonstrate that “h]uman beings adjust behaviour based on the metrics they’re held against. Anything you measure will impel a person to optimize his score on that metric. What you measure is what you’ll get. Period.”1)Ariely, Dan. “You Are What You Measure”. Harvard Business Review: June 2010. While he is neither the only nor the first to make this critical observation, Ariely makes the case compellingly, and we agree with him.

So, the purpose of the economy and the way it should be measured have to be the same thing. Otherwise, you’ll inevitably not optimize policy, because you’ll be concerned with a metric that doesn’t line up with your purpose. You’ll have difficulty bringing your policy and practice into alignment with your values and principles. Specifically, a focus on material gain for the macroeconomy – what is traditionally our focus in Canada – doesn’t always align with the flourishing of each person our economy is meant to serve: it too often subverts the human dignity that anchors a person’s flourishing.

In the case of GDP and flourishing, of course all other things being equal a higher GDP is more likely to lead to higher flourishing given that material advancement should make it it easier to take care of everyone. But we don’t take care of everyone. Our focus on measuring GDP skews our values toward productivity and away from the inherent worth of people. Thus we value what a person gives to the economy instead of what the economy provides to the person: we’re completely backward!! We look at humans as costs and their value as productivity when humans are ends whose value is their inherent human dignity. So we must work from our values to our policies, not vice versa, to be certain we’re not lead astray. We must identify the dimensions of life that are to stand as elements of what it means to flourish. Moreover, and still more uniquely, we must be aware of the capabilities that people need to possess in order to flourish (autonomy, connection, resilience) and also identify how to instill and/or bestow those capabilities.

The relationship between GDP and flourishing is not strong, so the GDP lens leads to suboptimal public policy. It also leads to a tournament culture in which people must be scrappy, competing and being and being “hard-working” to have a shot at enjoying life. That’s just wrong.

We advocate a major transition in the metrics we use to determine whether or not policy is working, which is itself a major transition in foundational, systemic policy. We need to move from a GDP lens to a flourishing lens. With an accurate lens that is more attuned to what really matters to people, we’ll get better results: we’ll come closer to creating broad flourishing for Canadians. While the economy is but one element of social structure and policy needed to support better outcomes, it is integrally linked to virtually all such elements and is therefore the key challenge to meet; James Carville was not wrong when he said ‘[it’s] the economy, stupid,’ referring to the importance of this bedrock social structure upon which all other social structures are built.


Adapted from Flourishing in Canada: How to get the Good Life (Elizabeth Neill and Andrew S. Nevin).

Photo: Elizabeth Neill

Footnotes   [ + ]

1. Ariely, Dan. “You Are What You Measure”. Harvard Business Review: June 2010.

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