Looking where it is brighter

In a popular story, Akbar asks Birbal to find the 10 most foolish subjects in his kingdom. One evening, Birbal finds a man looking for something under a lamppost. The man tells Birbal that he was looking for a ring. Birbal then asks him where he had lost the ring, when the man points to a dark ditch nearby. He had lost his ring in that ditch, but was looking under the street lamp because it was easier to look under its brightness.

Before we measure anything, we ought to check if our metrics make sense. Towards the end of the Second World War, economists wished to measure welfare. Since welfare is abstract and employs several qualitative attributes, they decided to measure, track and promote GDP growth, which we continue to do today.

They did this against the warning of Simon Kuznets, the economist who formalized GDP:

The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification.

Interestingly, we borrowed Kuznets’ metric, but not his wisdom. And by doing so, we continue to look for solutions to national problems under a lamppost that shines brightly.

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