Good health, a place to live, access to education, nutrition, social connections, respect, peace, human rights, a healthy environment, happiness. These are just some of the many aspects we care about in our lives. At the heart of many of these aspects that we care about are needs for which we require particular goods and services: think of those that are needed for the goals on that list above – the health services from nurses and doctors, the home you live in, or the teachers that provide education.Poverty, prosperity, and growth are often measured in monetary terms, most commonly as people’s income. But while monetary measures have some important advantages, they have the big disadvantage that they are abstract. In the worst case monetary measures – like GDP per capita – are so abstract that we forget what they are actually about: people’s access to goods and services.The point of this text is to show why economic growth is important and how the abstract monetary measures tell us about the reality of people’s material living conditions around the world and throughout history:

In the first part I want to explain what economic growth is and why it is so difficult to measure. In the second part I will discuss the advantages and disadvantages of several measures of growth and you will find the latest data on several of these measures so that we can see what they tell us about how people’s material living conditions have changed.

What are these goods and services that I’m talking about?Have a look around yourself right now. Many of the things you see are products that were produced by someone so that you can use them: the trousers you are wearing, the device you are reading this on, the electricity that powers it, the furniture around you, the toilet that is nearby, the sewage system it is connected to, the bus or car or bicycle you took to get where you are, the food you had this morning, the medications you will receive when you get sick, every window in your home, every shirt in your wardrobe, and every book on your shelf. At some point in the past many of these products were not available. The majority did not have access to the most basic goods and services they needed. A recent study on the history of global poverty estimates that just two centuries ago roughly three-quarters of the world “could not afford a space to live, food that would not induce malnutrition, and some minimum heating capacity.”1Let’s look at the history of the last item on that list above, books.A few centuries ago the only way to produce a book was for a scribe to copy it word-for-word, by hand. Book production was a slow process; it took a scribe about eight months of daily work to produce a single copy of the Bible.2It was so laborious that only very few books were produced. The chart shows the estimates of historians.3But then in the 15th century the goldsmith Johannes Gutenberg combined the idea of movable letters with the mechanism that he knew from the wine presses in his hometown. He developed the printing press. Gutenberg developed a new production technology and it changed things dramatically. Instead of spending months to produce one book, a worker was now able to produce several books a day. As the printing press spread across Europe, book production soared. Books, which were previously only available to a elite, became available to more and more people.This is one example of how growth is possible and what economic growth is: an increase in the production of goods and services that people produce for each other.What is economic growth?So, how can we define what economic growth is?A definition that can be found in so many publications that I don’t know which one to quote is that economic growth is “an increase in the amount of goods and services produced per head of the population over a period of time.” The definition in the Oxford Dictionary is almost identical: “Economic growth is the increase in the production of goods and services per head of population over a stated period of time”. And the definition in the Cambridge Dictionary is similar. It defines growth as “an increase in the economy of a country or an area, especially of the value of goods and services the country or area produces.”In the following footnote you find more definitions. Bringing these definitions together, and taking into account the economic literature more broadly, I suggest the following definition:Economic growth describes an increase in the quantity and quality of the economic goods and services that a society produces. I prefer a definition that is slightly longer than most others. If you want a shorter definition you can speak of ‘products’ rather than ‘goods and services’ and you can speak of ‘value’ rather than mentioning both the quantity and quality aspects separately.You find more thoughts on the definition of growth in the footnote.