Pushing Past the GDP: A New Framework for Measuring Progress and Wellbeing
by the PZI Team
February 21, 2023
The news is full of economists, corporations, and politicians agonizing over the GDP.
Countries around the world—including the US—use GDP (gross domestic product) as the go-to economic indicator to measure financial health, and to use as a basis for creating policies.
The US has been using the GDP since 1934, and after the Second World War, the World Bank adopted the GDP as a primary measure of economic progress.
But What Are We Measuring?
GDP measures how much money is spent in a country. But it doesn’t pay attention to whether that money is spent on something helpful or harmful.
The GDP treats nearly everything that happens in the market as a gain. Healthcare money spent treating any number of preventable diseases—or on the growing count of COVID-19 victims—a gain. If a country exports more animals and their products, it’s a gain. Superfund cleanup—a gain.
As a measure of economic vitality, GDP ignores whether money is spent in ways that matter. And it discounts fundamental aspects of economies, such as education, worker productivity, adequate social services, and durability of infrastructure.
Additionally, the GDP doesn’t take into account non-monetary benefits, such as volunteerism and mutual aid, or grandparents watching their grandchildren, or the value of strong communities.
It also doesn’t include the natural benefits of our environment—such as trees’ ability to ingest CO2 and help prevent erosion, or the benefits of clean air and water, or the intrinsic value of pollinating insects.
Often GDP reinforces and amplifies systemic violations of basic rights. Since everything in the measurement must be monetized, GDP commodifies individual lives.
Despite obvious problems with using GDP, it has persisted as an economic model because GDP growth has sometimes correlated with certain indicators, such as average longevity.
But improvements in quality of life generally don’t correlate to growth in GDP. Many countries have seen rates of some of the worst abuses of people, including child labor and trafficking, increase significantly over multiple years during simultaneous growth in GDP.
We Need a New Way of Measuring Progress and Wellbeing
Not surprisingly, many attempts have been made to “correct” GDP to better measure economic progress.
However, any serious reference to GDP as indicative of rights, health, or wellbeing remains a problem. Social, ecological, legal, and other determinants of health and wellbeing often cannot be monetized.
Additionally, since GDP only measures spending, the concept of legal or moral rights is irrelevant to the metric.
And, GDP will always be a measurement of activity or conditions confined within a country’s borders.
Putting a number on a country’s progress isn’t always what is needed.
For instance, the Universal Human Rights Index provides data and policy recommendations for every country, based on the existing obligations they have agreed to through various human rights treaties. This index includes an assessment of the protections of rights that pertain to health and wellbeing, such as those reflected in the Sustainable Development Goals (SDGs).
In a 2016 paper, a group of economists proposed the Sustainable Wellbeing Index (SWI) as a way to compare countries and their progress in implementing the SDGs while also addressing some of the shortcomings of the SDGs, which they called a “diluted guidance at best.”
In their paper, they described numerous alternative indicators that attempt to assess economic progress and wellbeing.
They proposed an overarching goal for the SDGs with three key elements. They argued that the overarching goal should include “a prosperous, high quality of life that is equitably shared and sustainable,” and that the SDGs should hit on three elements:
- “building a living economy,”
- “protecting capabilities for flourishing,” and
- “staying within planetary boundaries.”
These alternatives to the GDP are a good start, but what’s missing from the SWI, as well as from the SDGs, is an acknowledgment of the indelible connection between the rights, health, and wellbeing of humans, other animals, plants, and the rest of the natural world.
A New Tool for Measuring the Health and Wellbeing of Everyone
The evidence is clear that, for humans to thrive, other animals and the shared environment on which we all depend also must thrive.
How can we adequately measure advancements in the rights, health, and wellbeing of people, animals, and the planet? What are the best ways to determine if municipalities, states, nations, and regions are meeting the needs of their residents?
PZI is working with experts in public health, medicine, economics, the sciences, and government to create a comprehensive impact assessment tool and related metrics that can be used by advocates, professionals, communities, and policy makers to determine the impact of proposed or existing policies, projects, and industries on people, animals, and the planet.
PZI will be modeling the impact assessment tool after other impact assessment tools, such as child impact assessment tools that enable stakeholders to gauge the impact of a proposed policy or intervention on the health and wellbeing of children.
It’s past time to prioritize the interdependent rights, health, and wellbeing of humans, other animals, and the natural world over profits.