‘Cook dinner instead of ordering in, GDP falls’: Nithin Kamath sparks debate on economic metrics

Is GDP still the right way to measure progress in the 21st century? That question has resurfaced after Nithin Kamath, founder and CEO of Zerodha, shared a detailed reflection on the origins and limitations of Gross Domestic Product, echoing concerns raised by António Guterres, Secretary-General of the United Nations. 

In a post on X (formerly Twitter), Kamath revisited the history of GDP and argued that the world may need to rethink its reliance on the metric — especially as economies face profound shifts driven by artificial intelligence and environmental challenges. 

The origin of GDP: A crisis-era invention 

Kamath pointed out that the concept of GDP emerged during the economic turmoil of the 1930s. American economist Simon Kuznets was tasked with measuring the scale of economic collapse in the United States during the Great Depression. 

Kuznets originally intended the metric — then called Gross National Product (GNP) — to measure human welfare, not merely the volume of economic activity. He even suggested excluding activities that did not genuinely improve people’s well-being, such as military spending, excessive advertising, or inflated urban housing costs. 

However, global politics quickly reshaped the metric’s purpose. As the world moved toward the Second World War, governments needed a way to track industrial output — tanks, planes, steel, and other war materials. By the early 1940s, GDP had evolved into a production gauge, where every dollar spent counted equally, regardless of whether it went toward weapons or social welfare. 

A metric that counts “everything” 

Kamath highlighted a long-standing criticism: GDP measures economic activity but not necessarily societal well-being. He referenced examples popularised by economist Diane Coyle to illustrate how the metric can produce counterintuitive results. 

If a widower marries his housekeeper and stops paying her wages, GDP falls — even though the same work continues. If someone grows vegetables at home instead of buying them from a store, or cooks dinner instead of ordering takeout, economic activity appears to decline despite identical effort. 

In other words, GDP measures market transactions, not the real value of work or welfare. 

Growth that ignores environmental costs 

Critics argue that the metric also fails to capture environmental damage. 

Kamath cited remarks from António Guterres, who recently warned that the global economy must move beyond GDP to avoid ecological catastrophe. 

Speaking to The Guardian after the United Nations convened leading economists to discuss new economic frameworks, Guterres said existing accounting systems reward activities that degrade the planet. 

“When we destroy a forest, we are creating GDP. When we overfish, we are creating GDP,” he said, highlighting how economic growth can rise even as natural resources are depleted. 

The UN chief argued that governments must “place true value on the environment” and overhaul global economic accounting systems. 

A debate reignited in the AI era 

Kamath noted that despite decades of criticism — dating back to Kuznets himself — GDP remains the world’s dominant economic scoreboard. 

Yet the rise of artificial intelligence, automation, and digital economies may intensify the debate. Many forms of value creation, especially digital services or unpaid activities, remain poorly captured by traditional metrics. 

GDP still provides valuable information about production and employment, Kamath acknowledged. But the metric was built in the 1940s for an industrial economy focused on measuring output.