A Gauge of Well-Being

For decades, gross national product, the estimated money value of a nation's total output of goods and services, has been popularly accepted as the most significant gauge of prosperity. But the G.N.P. is a crude and sometimes misleading measure. As conventionally calculated, it fails to adjust for such nonmonetary penalties of industrial growth as pollution and the nightmare of city congestion, or for such additions to material well-being as the pleasure a husband derives when his wife cooks a gourmet meal instead of popping a TV dinner into the oven. Now, a more sensitive gauge has appeared in a place that guarantees it wide attention: the ninth edition of Economics, the classic college textbook by Nobel Laureate Paul Samuelson.

The new indicator, which M.I.T.'s Samuelson calls "net economic welfare," or N.E.W., is based on a pioneering study by Yale Professors William Nordhaus and James Tobin. Basically, N.E.W. tries to measure some of the more slippery realities not included in G.N.P. In N.E.W. terms, for example, the generally higher salaries collected by city dwellers are in a real sense worth little more than the lower wages paid in the countryside, because megalopolitans must pay much more for garbage collection, crime control and other services to achieve the same level of well-being as their rural cousins. The extra cost of these services is added to G.N.P. as a monetary outlay; it is subtracted from N.E.W. Similarly, under N.E.W., the value of money spent to buy and use air conditioning is reduced by the estimated cost of cleaning up the pollution caused by the electric utilities that supply the power. On the positive side, the value of a housewife's work, ignored in the G.N.P., is figured into N.E.W. by averaging what women of various age groups would be paid in outside jobs.

Samuelson frankly concedes that an increase in N.E.W. growth would have to come at the expense of conventional economic expansion. On the basis of the Nordhaus-Tobin study, Samuelson calculates that N.E.W. has grown much less than G.N.P. since 1929.

Some economists, like Arthur Okun, a member of TIME's Board of Economists, fault N.E.W. as an attempt to measure the unmeasurable; others, including Walter Heller, also a member of the board, applaud it as a step in the right direction. Samuelson himself admits that the N.E.W. is relatively primitive, but argues that "it is better to have an inaccurate sense of what we want than an accurate sense of what we do not want." He hopes that the inclusion of the N.E.W. concept in his textbook, which is used by nearly one-third of all college economics students in the U.S., will prod the Department of Commerce or some other Government agency into calculating an official economic indicator along the lines of N.E.W.

This file is automatically generated by a robot program, so reader's discretion is required.