Perhaps the most important omission from the current economic paradigm concerns the psychology of the sport. Research on “inequality aversion,” the idea that who gets what matters as much as how much there is, suggests that people care deeply about how the pie is sliced, even when a fairer division means settling for a slightly smaller one.
The economics of the everyman
Can growth, given enough time, deliver widely shared prosperity, as capitalism’s champions still insist? Or does the way the game is designed predetermine who benefits from growth? Far from disappearing, could excessive inequality gnaw away at the very foundations of economic growth?
GDP’s shortcomings have inspired repeated attempts to devise a better answer. In Mismeasuring Our Lives, Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi argued for moving beyond economic production and measuring well-being, distribution, and sustainability. Sen’s capabilities approach asks a still more fundamental question: not merely what resources people possess, but what those resources actually enable them to be and to do.