Happiness & Well-Being: Alternatives to GDP

Economists argue about whether we are in a recession or are about to enter one. It seems like a moot point, when we hear daily about drops in market averages and value of the dollar, and rises in price of a barrel of oil or an ounce of gold. Then there are the astounding figures on home foreclosures, the montlhy expenditures in Iraq in the billions, and the staggering national debt. It was not so long ago that President Bush was campaigning on the "ownership society" and continues even now to insist that our token rebate checks this spring will stimulate the economy back to good health. It all seems like a horribly morbid joke.

The Gross Domestic Product (GDP) is supposed to be a measure of our nation's economic health. GDP is the total value of the goods and services that we produce in a year's time in this country. It does measure the size of our economy, but it is limited in that it is analogous to weighing an enormously fat person without making any statement about their general health. The graph at the left shows what Jerome a Paris at DailyKos calls the "W Economy," where GDP increases significantly, but wages stay flat.

Another alternative measure is GPI (Genuinel Progress Indicator), and using this indicator, the US fares rather more poorly. The formula for calculating GPI starts with personal consumption (like GDP), but adjusts for income distribution (economic status) and adds positive contributions such as the value of household and volunteer work. It subtracts the loss of leisure time, the costs of crime, commuting, pollution and other factors that reduce well-being.

Tthe U.S. GDP has steadily increased since 1950 (though it may be volatile at the moment.) GPI peaked about 1975 and has been relatively flat or declining ever since. Our neighbor Canada is relatively more well-off, in terms of GPI.

LA Times provides more detail.

SWB (Subjective Well-Being) is another measure that has been used. One study was done last year which showed that SWB correlated most with health, then wealth, then education. From a global perspective, poverty put a damper on SWB. The study was the first to result in a comparative map of Global Happiness. The Calvert-Henderson Quality of Life Indicators is another measure that takes into account more wholistic factors. A systems approach is used to illustrate the dynamic state of our social, economic and environmental quality of life. The dimensions of life include: education, employment, energy, environment, health, human rights, income, infrastructure, national security, public safety, re-creation and shelter.

The LA Times article makes some practical suggestions. They point out that Bhutan, for example, recently made "gross national happiness" its explicit policy goal, that Canada is developing an Index of Well-being, and the Australian Treasury considers increasing "real well-being," rather than mere GDP, its primary goal. It's all about "values," the thing we hear so much about and need to consider more and then become advocates.

If as Americans we could measure well-being as a basis for success, rather than just size of the economy, there would be more support for reforms that we really desperately need. We could tax carbon emissions and depletion of natural resources rather than taxing goods (labor, savings, investment.) We could reduce income disparity and reform international trade so that our environment was protected, labor rights were respected and blind greed was no longer rewarded.