Excellent article over at Aeon (we linked to earlier in the week, but it deserves its own post), I’d suggest you head over and give it a read. To quote one passage:
Kuznets lost the argument about measuring social welfare over economic activity back in the 1930s. Now it’s time to put these two concepts in the balance again, not least because so many critics of GDP fault it for not measuring well-being. It was never meant to. Yet while we have always known this, economists have routinely used GDP growth as shorthand for well-being. And while this has a sound rationale, there are good reasons for thinking that the gap between social welfare and economic activity, as measured by GDP, is widening.
The article also mentions the usefulness, and shortcomings, of social indicators – such as the one Statistics New Zealand has put together (related discussion from Donal, Shamubeel, and me). I think the article puts into perspective how careful we have to be with measurable goals, and why we need to be a little clearer on the limits of our knowledge and what this means for policy – both about trade-offs and how these translate into welfare.
I would recommend the entire article, there is really too much in it for me to fairly summarise anything
Update: This piece on Partha Dasgupta at MR University is also relevant.