Do citizens even understand GDP?

Every serious politician loves GDP. If you don’t clap like a seal at rising GDP, you won’t get anywhere near senior leadership. Every Prime Minister since Gordon Brown has at some point declared growth to be their most important priority.

So will Keir Starmer. In fact, he’s more blunt about it than most. “We’ve put a lot of work into this and we know: growth is the answer,” he said in a speech recently. “Growth – it’s the only show in town.”

The problems with growth as a measure of progress are well rehearsed. What I’m curious about is whether or not ordinary people care. I mean, I expect they do because they’re told it’s important. But do people even understand what GDP is and why it matters?

In 2020 the Office of National Statistics, who compile the GDP figures, thought to ask. They partnered with some statistical researchers and surveyed 1,665 people, and ran a series of focus groups on economic ideas and how they’re understood. The result is a discussion paper called Public Understanding of Economics and Economic Statistics.

They found that “less than half of the British public are able to correctly identify the definition of GDP from a list of options.” Many people confused it with GBP, the currency, or the data protection acronym GDPR. Even if they knew the definition, “the vast majority of focus group participants demonstrated little to no understanding of GDP.”

In fact, “GDP was the least understood concept” of all the economic concepts that they raised – inflation, interest rates, the deficit, etc. “GDP was by far the least accessible economic concept among focus group
participants.”

Stop and think about this for a moment. Put aside your own feelings about the merits of growth or degrowth. Consider for a moment that less than a third of UK citizens say they have a good understanding of GDP, this thing that every politician tells us is the most important thing in the entire universe.

I don’t know about you, but I find that rather tragic. People’s lives are ordinary. They’re grounded in the practical realities of our bodies and our communities, our time and our immediate surroundings. We care about the quality of our kids’ schools, or whether we can get a doctor’s appointment. And here are politicians telling us that their number one priority is this abstract number that has no bearing on our lives. No wonder people don’t trust politicians and feel that they’re out of touch.

I understand that it’s a difficult balance for politicians. They need to appeal to ordinary voters and show that they care about the same things that they do. They also need to ‘reassure the markets’ and make sure that the press barons don’t turn their newspapers on them. But can’t we do better than this?

It’s not that people are ignorant, though people with more education were more familiar with GDP. The idea itself is flawed to the point of absurdity and people can see that for themselves. In the focus groups, the researchers explained GDP to participants so they could discuss it. There were a variety of reactions, they noted, when GDP was spelled out. “The most common was silence and indifference.”

Someone tell Keir Starmer, who last year told the country that “we need three things: growth, growth, growth.” To be fair to him, he spends a lot of time trying to tell people why growth should matter to them. But wouldn’t it be better to take citizen’s needs as a starting point, rather than an economic abstract?

Growth matters to an economy addicted to it, but aren’t we crying out for a better vision of what a good life is? A vision of progress that actually means something to people? How can we ever build a better society if the majority of people don’t understand what our main measure of success means, let alone how it relates to them?

• If you want my own tentative answers on what that vision might be, I wrote a book about it with my friend Katherine Trebeck: The Economics of Arrival.