By Timothy Bovy
Traditional GDP hides inequality. The UN’s e-GDP provides us with the metrics to measure inequality directly, make it visible, and build it into policy decisions.
The United Nations is encouraging us to move beyond GDP in order to return to an era when economics had a moral purpose. One of the major problems, according to Simon Kuznets, the chief architect of the United States national accounting system in 1934, is that GDP conceals major issues such as inequality, “making it an unreliable or inappropriate measure of wellbeing.” Inequality, notes the UN core group on Beyond GDP, “manifests itself in many ways, such as ability to live a healthy and comfortable life, to enjoy physical and legal safety and security, to access education and developing skills to participate in society, have financial security and dignified work, influence governance, and enjoying individual, family and social life, and exercise the right to express oneself.”[1]
The ability of the political community to promote the common good would be impeded by large gaps between rich and poor.
What might surprise us is inequality’s long and troubled history, going back over 2,000 years. Plato called it “the greatest of all plagues” because it freed the rich from feeling any obligation to society and the common good, noting: “There should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evil.”[2] Aristotle believed that “the ability of the political community to promote the common good would be impeded by large gaps between rich and poor.”[3] Shakespeare’s King Lear intoned, “So distribution should undo excess, and each man have enough.”[4] Plutarch put it succinctly in the first century: “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”[5]
And yet, inequality persists on a grand scale. In his final State of the Union Address in 2016, President Obama described rising income inequality as the “defining challenge of our time.”[6]
Respondents to the World Economic Forum (WEF) Global Risk Report of 2026, selected inequality as the most interconnected global risk, resulting in: lack of economic opportunity or unemployment, involuntary migration or displacement, decline in health and wellbeing, societal polarization, insufficient public infrastructure and social protections, and erosion of human rights and civic freedoms.[7]
To counteract the ongoing and pernicious impact of inequality, the UN’s High-Level Expert Group (HLEG) on Beyond GDP, established in 2025, is developing “e-GDP” (equity-adjusted GDP), which adjusts average GDP downward to reflect high inequality, acknowledging that wealth is increasingly concentrated among the top 1% while 71% of the world’s population faces rising disparity.[8] Income inequality, in particular, has increased significantly since the late 1970s due to the 1 percent’s disproportionate share. What we learned in 2008 is that since 1976 “almost all the benefits of growth were being monopolized by the highest paid and those wealthy enough to own significant portfolios of financial assets,”[9] enriching society’s select and winnowed few at the expense of the many. In the growth generated by the economic recovery since 2009, 95% was monopolized by the top 1%. They saw their incomes rebound by 31.4%. Meanwhile, 99% had seen virtually no gain in income since the crisis.”[10]
According to development economist Nora Lustig, “relying on GDP alone ignores inequality, environmental degradation, and long-term sustainability.”[11] The benefit of e-GDP is that it adjusts average GDP downward for the degree of inequality, reflecting that the same average GDP can translate into different levels of welfare depending on its distribution.”[12]
The expanding inequality that we have been experiencing since the 1970s suggests that it is both heavily embedded and deliberate. I say “deliberate” because we will it. Inequality is not the by-product of some uncontrollable force. When Immanuel Kant said, “Live your life as though your every act were to become a universal law,” he meant that we can will the moral and ethical structures necessary to create a government that serves the common good.
But, what if the will of those in power is corrupt, interested only in self-serving ends that perpetuate self-aggrandizement to the exclusion of the needs of society? In such a society, “taking” rather than “making,” rent-seeking rather than creating, enriching the few at the expense of the many, taking the free out of free markets [makes] a mockery of democracy. In that world, inequality and misery are intimate companions.”[13]
We need to measure inequality directly, make it visible, and build it into policy decisions.
Traditional GDP presents such a world in a positive light by hiding inequality. The UN’s e-GDP is providing us with the metrics to change that: We need to measure inequality directly, make it visible, and build it into policy decisions. That means moving from How fast is the economy growing? to Who is benefiting, who is excluded, and how uneven are the outcomes?
These questions raise issues that Milton Friedman absolved organisations from having any obligation to consider[14], but which the UN’s Beyond GDP framework deem vital. Organisations do, in fact, have a responsibility to promote desirable social ends, such as tackling inequality, and its many interconnected negative consequences, as a means of giving economics a moral purpose.
About the Author
Timothy Bovy has over 35 years of experience in designing and implementing various types of information and risk management systems for major law firms such as Clifford Chance; and for international accountancy firms such as Deloitte. He has also developed solutions for organisations such as BT, Imperial Tobacco, Rio Tinto, the Kuwaiti government, The Royal Household, and the US House of Representatives. Tim is an elected member of The Royal Institute of International Affairs, Chatham House, an Independent Think Tank based in Central London, and holds a BA degree, magna cum laude, from the University of Notre Dame, and MA and C.Phil degrees from the University of California, Davis.
References
[1] HLCP Core Group on Beyond GDP, “Valuing What Counts – United Nations System-wide Contribution on Progress Beyond Gross Domestic Product (GDP),” UN High-Level Committee on Programmes(HLCP), 17 August 2022
[2] Plato, Laws, available at http://classics.mit.edu/Plato/laws.5.v.html
[3] “The Common Good,” Stanford Encyclopedia of Philosophy, available at https://plato.stanford.edu/entries/common-good/
[4] Shakespeare, King Lear, Act 4 Scene 1
[5] Michael Marmot, “Rich and Poor – The Unequal Struggle,” New Scientist, May 24, 2006
[6] (www.nytimes.com/2016/01/13/us/politics/obama-2016-sotu-transcript.html).
[7] World Economic Forum, “Global Risks Report 2026,” available at https://www.weforum.org/publications/global-risks-report-2026/digest/
[8] High-Level Expert Group on Beyond GDP, Interim Progress Report November 2025
[9] Adam Tooze, Crashed: How a Decade of Financial Crisis Changed the World, London: Allen Lane, 2018, p. 456
[10] [2] Ibid., p. 455
[11] UN Calls for Global Economic Reform Beyond GDP, March 8, 2026 available at https://www.naturalworldfund.org.uk/beyond-gdp-sustainable-economic-reform-climate-nature/#:~:text=March%208%2C%202026-,UN%20Calls%20for%20Global%20Economic%20Reform%20Beyond%20GDP,%2C%20we%20are%20creating%20GDP.%E2%80%9D
[12] Please see footnote 8.
[13] Angus Deaton, “Inequality and the future of capitalism,” The IFS Deaton Review, May 14, 2019, available at https://www.ifs.org.uk/inequality/expert-comment/inequality-and-the-future-of-capitalism/?gclid=CjwKCAjw7-P1BRA2EiwAXoPWA4uod8oxxgvp5XrO4RlnEL9xdCcGIKAgev-rBq6uqOSsPwGB1dP-LBoCeJMQAvD_BwE
[14] Milton Friedman, “The Social Responsibility of Business is to Increase its Profits,” The New York Times Magazine, September 13, 1970, available at http://umich.edu/~thecore/doc/Friedman.pdf
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