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

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.


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.


National accounts, particularly the concepts of gross national product or gross domestic product, provide an incomplete and often misleading record of economic performance, especially of welfare, between countries and over time. Much greater weight needs to be given to other measures of performance of a society, to employment, to the distribution of income and wealth, to indicators of social conditions, of education, of health, and of housing. Recently in developed countries, the costs of high rates of material progress have been publicized in terms of pollution, environmental damage and the unpleasant aspects of a modern urbanized and motorized society.

Problem Type:
F: Fuzzy exceptional problems
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
Date of last update
08.08.2016 – 05:32 CEST