Problem

Inadequacy of economic accounting systems


Experimental visualization of narrower problems
Other Names:
Excessive reliance on economic indicators of human development
Inadequacy of GNP statistics
Misleading Gross National Product index
Inaccurate economic growth measures
Reliance on GDP as measure of human progress
Inappropriate application of Gross Domestic Product
Nature:

Traditional and economic accounting systems for national accounts do not place value on natural assets, both ecological and human, and do not have indicators which directly take into account environmental and social factors, such as ecosystem health, literacy rates, personal safety, infant mortality, wealth distribution, human rights, religious freedom, the free flow of information and democratic participation.

Background:

Gross Domestic Product (GDP) is the sum of all incomes derived from the current production of goods and services earned in the economic territory, wherever the earner of the income may reside. Gross National Product (GNP) is the sum of all incomes earned by the citizens of the state. Some of this income arises from abroad, but none of it accrues to non-residents. Natural resource accounts show stocks, flows, inputs, outputs and balances for natural resources, such as water, minerals or forests. These may be in physical terms or converted to monetary values. They can be used to help in the management of natural resources.

Incidence:

Because GNP is actually boosted by money spent on pollution clean-up, rehabilitation of drug addicts, control of soil erosion, and the like, the productivity of countries with remedial rather than preventative programmes for social and environmental care is actually boosted. Hidden social costs are built up, which also increase with such social ills as pollution and crime. This will then increase the need for further remedial social services and a subsequent round of deficit spending.

Related UN Sustainable Development Goals:
GOAL 7: Affordable and Clean EnergyGOAL 8: Decent Work and Economic GrowthGOAL 10: Reduced InequalityGOAL 12: Responsible Consumption and Production
Problem Type:
F: Fuzzy exceptional problems
Date of last update
08.08.2016 – 05:32 CEST