Words by Smiley Team
The old adage, “money can’t buy happiness”, didn’t get much thought when governments adopted Gross Domestic Product (GDP) as the predominant indicator of societal progress. However, they would have done well to consider this old wisdom, says David Barmes from campaign group Positive Money.
Measuring wealth alone, GDP assumes countries do better when the money piles high. It considers the total income and profits generated in a country. What it does not consider, is whether this wealth has done any good or even damage.
David tells Smiley News: “The main issue with GDP is that it measures tons of things that are bad for us as well as things that are good. For example, planned obsolescence - when goods like washing machines or fridges are purposefully designed to last a short time - is good for GDP. But it’s definitely not good for us or the planet.”
To measure economic success while considering its effects, David suggests we build up a toolkit of different indicators that would work in unison to understand how happy and eco-friendly a country is, not just its wealth.
“The Sustainable Development Index is a good one,” he says. “It combines the Human Development Index, which measures life expectancy, education and income; with measures of carbon emissions and material footprints.
“I think this is a really good way of showing how well different countries are doing at meeting human needs within ecological limits,” he adds.
Already, countries around the world are testing these new ways of monitoring progress. In 2019, New Zealand’s Prime Minister, Jacinda Ardern introduced other measures focused on wellbeing into the country’s budget strategy. Their alternatives to GDP measure the wellbeing and living standards of citizens as well as environmental conditions, rather than profit alone.
"It’s too soon to know how much impact this new system has had. As David explains, “It takes a long time to see big changes when you're trying to measure social and environmental factors. Whereas GDP is a much more sensitive measure, these alternatives won’t change overnight.”
However, he envisages that eventually, we could transform society for the better by replacing GDP with social and environmental measures.
"In my mind, there’s a better way of running the economy than what we currently have," he says. "And by better meeting basic human needs we can find a way to thrive.”
For more ideas on how we can transform the economy read Positive Money’s report, The Tragedy of Growth.
Positive Money is working with policymakers to realign economic goals with environmental needs.
Find more resources about wellbeing economies on Positive Money's website, and sign their petition for a fair, green future here.
