Your money or your life: Can nations prosper by putting well-being before GDP in 2020?
BANGKOK: With protests from Chile to Hong Kong last year over widening inequality, violence against women, and climate change, more policymakers and campaigners started to openly debate potential shifts away from an economic model that relies on growth.
New Zealand became the first nation to introduce a Wellbeing Budget that requires all new spending to go to five priority areas including mental health, child well-being, indigenous people and a low-carbon-emission economy.
The idea of going beyond gross domestic product (GDP) as the main measure of success is not new.
Bhutan coined the term "gross national happiness" in the 1970s, the Organisation of Economic Cooperation and Development has released an annual well-being index since 2011, while the United Nations' annual happiness report started in 2012.
But can nations prosper by putting well-being ahead of GDP in 2020? The Thomson Reuters Foundation asked nine experts:
ABDUL ABIAD, DIRECTOR, MACROECONOMIC RESEARCH DIVISION - ASIAN DEVELOPMENT BANK:
"A focus on sustained economic growth has helped raise hundreds of millions of Asians out of poverty over the last few decades. Continued GDP growth will be critical to pulling up the remaining 326 million who still struggle in extreme poverty.
But developing Asia is now largely middle-income, and people and policymakers are looking beyond progress only in income. An increasing focus on environmental sustainability, liveable cities, holistic health, and fairness and opportunities for all will be a hallmark of economic development in the coming years.
It is not an either-or proposition; these are growth sectors that have the potential to drive the region's GDP."
GEMMA CORRIGAN, LEAD, SUSTAINABLE MARKETS - WORLD ECONOMIC FORUM:
"In order to create a more equitable and sustainable world, we need to factor into our decision-making the consequences of our actions not only for financial and physical capital but for human, social and natural capital. This means measuring the impact of growth on living standards as well as future generations and the environment.
We can already do this; the next generation of measurements will also be able to take into account concepts like well-being so that we ensure our economic system is truly aligned with societal goals."
KATHERINE TREBECK, POLICY & KNOWLEDGE LEAD, WELLBEING ECONOMY ALLIANCE:
"The question of our time is not whether nations can prosper putting well-being ahead of GDP, but how they can possibly continue to put GDP ahead of well-being and expect to prosper.
How can they stick to an outdated recipe in the face of evidence that GDP-orientated notions of prosperity are not only harming people and planet, but that the benefits of GDP in terms of social progress tail off after the work of growth is done? How can they refuse to embrace a new agenda, when there are thousands of examples of businesses, cities, communities and politicians who are striving towards a goal not of faster GDP or short-term profit, but returns for people and planet?"
KATRIN JAKOBSDOTTIR, PRIME MINISTER OF ICELAND:
"The climate crisis underlines the urgent need of thinking beyond GDP while measuring economic success. Prosperity without sustainability is no prosperity. The wellbeing economy initiative demands new thinking, putting people and the planet first. We have no choice but to rethink our economies to tackle the largest crises of our times: climate change and inequality."
MATT MAYER, DIRECTOR, ECONOMY FOR THE COMMON GOOD:
"The current economic system, which measures success solely in financial terms, is no longer fit for purpose. The focus on GDP justifies the maximisation of profit above any competing interest, thereby exacerbating the very issues we so urgently need to address, like social inequality, global warming and environmental degradation.
Only by putting well-being, the health and happiness of people within the boundaries of a sustainable ecosystem ahead of GDP, can we hope to maintain the foundations of prosperity in the long run.
We need to measure what matters. That way we can make what matters the very criteria by which to tax business-as-usual and by which to incentivise the kind of businesses we want to see."
MUHAMMAD YUNUS, NOBEL PRIZE LAUREATE & MICROFINANCE PIONEER:
"Economic growth is a means, it is not an end. The end is the world or society we want to build. If we want to build a world of, say, three zeros — zero poverty, zero unemployment, and net-zero carbon emissions - we have to craft the framework of economics and measurements to assess its successes and failures in achieving these goals. GDP and the economic framework which leads to it are not designed to achieving these goals."
NICOLA STURGEON, FIRST MINISTER OF SCOTLAND:
"Traditional measures like GDP are limited in what they can tell us about the distribution of income and wealth across society and whether it is sustainable for future generations.
As a government we recognise that economic growth is hugely important, but it must be matched by improvements in our environment, in people's quality of life, in the opportunities available to people and the public services they have access to.
Wellbeing economy aims to deliver growth in a way that enhances the quality of life for all of our citizens and which is compatible with a net-zero emissions economy.
When we focus on wellbeing we start a conversation that provokes profound and fundamental questions on what really matters to us in our lives – what kind of country and society we want to live in."
PINELOPI KOUJIANOU GOLDBERG, CHIEF ECONOMIST, WORLD BANK:
"Higher GDP is not the goal, well-being is!
Research suggests that people in wealthier countries are on average happier than those in poorer ones. Yet it is becoming clear that these citizens care about more than average growth. They value clean air and water, time with family, quality of work and life, and a more equitable distribution of income and wealth.
Often in low-income countries, the pursuit of traditional prosperity through economic growth is still the priority. But focusing on short-run growth, even in developing countries, may compromise long-run prosperity and well-being, as people suffer the consequences of environmental degradation and climate change."
PEDRO CONCEICAO, DIRECTOR, HUMAN DEVELOPMENT REPORT OFFICE, UN DEVELOPMENT PROGRAMME:
"GDP was never designed to measure wellbeing. It is simply a metric of how much income is generated in an economy in any given year. Of course, income is important - it provides many of life's essentials, propels investment, pays for social services and public goods. But there is more to life. Is a nation truly "prospering" if it is wrecking the environment or its citizens are not able to live dignified lives?
Pursuing genuine wellbeing, including but also going beyond income, recognises this. The Human Development Index http://hdr.undp.org/en/content/table-1-human-development-index-and-its-components-1 (HDI) – updated in December – adds health and education achievements to portray a broader measure of a nation's prosperity."