Outside In | If GDP doesn’t add up, how is the world to measure well-being and progress?

The world’s fixation with GDP has been questioned since the 1970s by Bhutan, which started measuring Gross National Happiness instead. Maryland is counting truly precious items like leisure. How can Apec contribute to the discussion?

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Reporters gather to get a document with GDP details ahead of a press conference by China’s State Council Information Office in Beijing on January 17. Photo: EPA-EFE

Published: 10:00pm, 17 Jan 2020Updated: 2:34am, 18 Jan 2020

Just over a decade ago, the government of Nicolas Sarkozy in France set up a Commission on the Measurement of Economic Performance and Social Progress. Its report, by a team led by Nobel laureate Joseph Stiglitz, was titled Mismeasuring Our Lives: Why GDP Doesn’t Add Up.

A year ago, revisiting the theme, Stiglitz reiterated: “If we want to put people first, we have to know what matters to them, what improves their well-being and how we can supply more of whatever that is. The Beyond GDP measurement agenda will continue to play a critical role in helping us achieve these crucial goals.”

The consensus on the shortcomings of GDP as “the overlord of measures” of economic progress strengthens by the year. So it is welcome that Apec, under Malaysia’s chairmanship this year, is looking “beyond GDP”. But it is perplexing at the same time, since the literature on the issue has simmered for decades. The Asia-Pacific Economic Cooperation forum’s largest challenge will be coming up with something new to say.

Since Bhutan’s monarch Jigme Singye Wangchuck decided in the early 1970s to measure Gross National Happiness rather than gross domestic product, finding alternative ways to measure communities’ well-being and economic progress has become an entire cottage industry.

I’m aware of at least 17 other alternatives to GDP: from the OECD Better Life Index and the Human Development Index to the Index of Sustainable Economic Welfare and the World Bank’s “comprehensive wealth” of nations; from Britain’s Thriving Places Index, Canada’s Index of Well-being and China’s green GDP to National Accounts of Well-being, the Happy Planet Index and the World Happiness Report; and perhaps the most ambitious of them all, the US state of Maryland’s Genuine Progress Indicator.

To be fair to Simon Kuznets, who created GDP as an indicator of national income during the Great Depression and before the second world war, he would probably argue from the grave that the use of the GDP measure has exploded far beyond his original intended purpose – to measure production of whatever kind, good or bad.