GDP as a Measure of Economic Welfare

Ever since the early days of National Income accounting we can observe periodic surges of demands to fix the measurement of GDP to better reflect progress, welfare or even happiness. In recent years even Presidents and Prime Ministers in Europe have joined the chorus of the discontent. In this paper I argue that the critique is mostly misguided. Welfare measurement has not been the objective of the GDP accounts especially since the late 1940s when National Accounts became a vehicle for applying Keynesian economics for, primarily, short run stabilization. I also argue that the search for a unique index of welfare, well-being, or happiness is a chimera.