Wealth matters. Thus, measuring wealth matters because ultimately, that's what determines what is feasible for the economy today and into the future. Modern economies can be complex. There are many different sectors: the government sector, the banking sector, international trade, and domestic trade relationships. We understand these relationships by using economic statistics. Economic statistics are the lens through which we observe the economy. Policymakers, businesses and investors all update and change their behaviour based on what they see through that lens.

As complex as a modern economy might be, we can distil some things to fairly simple, fundamental first principles. It’s similar to running a bakery: the size of the pie that we can produce in the future is determined by the stock of ingredients that we have in the pantry. If we’re running out of milk, eggs, sugar and flour, then the size of the pie we can make in the future shrinks. The problem we've had is that our economic statistics have focused only on the size of the pie while ignoring everything that's going on in the economic pantry. I'm not merely talking about milk, eggs and butter, albeit there is a lot of economic research on those specific commodities, I’m talking about the fundamental economic ingredients that make up modern, prosperous economies. These are components of wealth, capital assets which include things such as physical infrastructure like buildings, transport infrastructure, machinery and factories. We need those in order to develop goods and services in a modern economy.

If we survey the past century, what has happened to the global economy? We have seen economic growth undergo an unprecedented meteoric rise in all parts of the world. We have seen life expectancy and literacy rates jump. Moreover, we have seen an irrefutable improvement in the human condition: Access to education, particularly for women and girls, has increased along with access to basic lifesaving medical care, which has prevented the deaths of young children that were commonplace only a century ago.

However, this unprecedented economic growth and improvement in the human condition have taken a toll on the planet. We have seen the release of one and a half trillion tonnes of CO₂, the reduction in the population of nearly 70% of the world's species, and now, we have driven one million additional species to the brink of extinction. These ecological and environmental catastrophes have the potential to wipe out the century's worth of economic growth that we've enjoyed. One reason our economic measures have created a dichotomy between being able to calculate things that work and not measuring other important facets at all is that economic measures narrowly focus on the size of the pie, our income. Little importance has been afforded to the assets on which the pie is grounded.

Modern economies have tremendously changed over the past half-century or longer. If we looked back just 50 years ago, international trade was only about 25% of total global economic output. Last year, it was closer to 65%. That’s an enormous shift in the structure of the economy, whereas we used to produce things domestically, now we trade. Global trade helped us share ideas and cultures and people across borders, but it hasn't always led to an equitable distribution of the gains or benefits of that trade.

If you think the world is unequal in terms of its income right now, we are even more unequal in terms of the impacts that we are having on wealth. One example is the global climate system. Wealthier people in wealthier countries have been overconsuming for the past half-century. In fact, for the past 150 years, we’ve been overconsuming our component of the shared global carbon budget, emitting more carbon than we should be. This matters for international policy, it matters for climate change and it matters for ethics and fairness in how we distribute the gains from trade. Right now, the way that we account for carbon emissions determines how we proceed in terms of policies like the Kyoto Protocol or the Paris climate change agreement. Thus, although economies have expanded greatly and the world has become deeply interconnected with the exchange of goods, services and people across borders, it has incurred a cost. We must work to change our wealth parameters to warrant a sustainable, ethical and inclusive future.