These are strange political times in the UK, it seems that David Cameron’s Tory Government is about to implement one of the most interesting progressive policy ideas of recent times. Moving away from GDP as the only measure of a country’s success, to actually trying to measure people’s happiness and sense of well being.
Darien Fenton blogged about this last year and there has been interest in this idea for some time but it was the push by Joseph Stiglitz and Amartya Sen on behalf of Nicolas Sarkozy that has given it initiative over the last couple of years. Essentially the Stiglitz concept is about developing measures for the value (and degradation) of all resources, physical and human. They have proposed reporting on the state of the environment, the equality of incomes, the quality of public services, free services provided within a family or community and the contentment of ordinary citizens. Its not just Stiglitz and Sarkozy of course, for example Simon Upton is leading some parallel work in the environment directorate at the OECD
Just how much of this the Cameron government will take up is not yet known. As the article above notes this is a tricky time in UK politics to be measuring the public mood in the face of massive budget cuts and increased charges. So, good on them for looking at it.
Why is this important work? Because while GDP has the advantage of being a clear and consistent measure, and tells us about the economic value of goods and services generated in our country, it says nothing about the real impact of the economy and how it interacts with social, environmental and other goals. After the global financial crisis it is clear that simple measures of economic growth can hide all manner of ills. To put it another way, as the old story goes, there is nothing so good for GDP as a war.
Of course the ideas are not without their critics or weaknessses. Some have suggested that if these measures are to become an international index it will put barriers in the path of developing countries achieving greater levels of development. A major challenge will also be how to integrate a different measure into policy making and be able to demonstrate the links between particular policies and happiness. Moreover, the challenge still remains to create the jobs that support environmental and social issues as well as more traditional economic goals. But that is the big challenge of our times, and measuring a broader range of factors is a good first step.
It’s a good point with GDP (spending money) not being a perfect measure of quality of life. People get sick, spend money on doctors and medication – you get higher GDP. People divorce, spend money on lawyers -you get higher GDP. Families are dislocated or overworked, services that were once done by family members without money changing hands, like cooking or childcare are now often outsourced to paid services – and you get higher GDP.
I’m not sure that the happiness index “will put barriers in the path of developing countries achieving greater levels of development” – those levels of development will greatly increase happiness, it’s so-called “developed” countries that increasing GDP etc does nothing for personal fulfilment/well-being.
Environmental concerns could hold things back for developing countries, but a lot of improvement can be done without necessarily having large environmental impact – if they jump straight to clean technologies. And they’ll still have far smaller carbon footprints than westerners… (and if we want to limit them we need to limit ourselves first)
Great idea-a ‘happiness’ index, as Darien’s Jim Stanford “Economics for Everyone” posts referred to, GDP is only useful for measuring certain things. There is a slight flaw however in the UK tories new found touchy feeliness and you do not have to be an academic to discern it.
They have the machete out for what remains of the UK ‘welfare state’.
GNP needs to be referred to once again, within a mix of metrics.
When Muldoon was having problems with the economy and the falling GDP he too introduced an alternative to GDP- I think he called it the Happiness Index, and he announced that we led the world. Whoopee..Nothing really changes!!!!!!!!!!
Does this mean that we should be happy with NZ’s place at 3rd on the Human Development Index (http://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index#Very_high_human_development_.28developed_countries.29) – because I don’t think the quality of life for New Zealanders has improved by 17 places over the past year.
‘as the old story goes, there is nothing so good for GDP as a war.’
Very true, and what makes war so good for the economy is that government spending skyrockets.
“I don’t think the quality of life for New Zealanders has improved by 17 places over the past year.”
It’s probably a reflection on how far downhill the rest of the world has gone
Yes I was quite glad to see the change. It will always be held back internationally however because the USA is not keen on measures that show it is declining as opposed to growing and a lot of the ‘happiness’ indexes can show that.
I think a move away from total reliance on GDP and including things liek:
These things can be cintrubting towards the productivity of the country and to the economy, directly or indirectly eg through lowering of crime rates, providing a good working environment etc.
I’m not so sure about the contentment of ordinary citizens., as that seems really hard to measure.
The idea of a “happiness” index doesn’t really seem to me to be the way to go. What does that actually mean in terms of how well the country is doing?
I would also include community services/activities that encourage people to contribute positively to society, and maybe the extent of participation in democratic processes by the population.
The first sentence above should include that I think that move away from GDP could be a good thing.
we should be looking at Net Social Welfare as a measure of economic growth which includes things like happiness aswell as GDP.
GDP, which one, nominal or PPP
That in itself shows it not the best absolute measurement of a country well being.