Need to go beyond GDP

GDP has long served as an indicator of development. In terms of traditional utility theory, there was an apparent connection between more income and higher well-being, measured by the consumption levels of food, shelter, clothing, and health care. However, studies have revealed that higher income levels do not necessarily mean greater well-being especially in the context of adverse impacts on climate change, biodiversity loss, inter-species balance, lack of access to basic amenities, social inequality, and increased stress levels.

It is increasingly being recognised that a focus on GDP growth alone cannot address problems of climate change, education, health care development, and governance. The need to complement purely GDP-based progress with alternative measures of economic and societal progress is now being suggested as a new reference point for measuring quality growth.

Nature, biodiversity and ecological balance
 

Like physical capital and human capital, nature and biodiversity are assets and should be factored in accordingly. The current measure of GDP is highly human-centric. This should change. The inter-species balance is important for the health and stability of ecosystems.

According to a UN Report, the global human population has more than doubled (from 3.7 billion to 7.6 billion) since 1970 and the average abundance of native species in most major land-based habitats has fallen by 20 per cent, and invasive species (around 47 per cent of the total) have entered across several countries. In several parts of the world there has been an erosion of the cultural and spiritual base of societies. The time has come to factor in these aspects in national economic accounts and facilitate more informed decision making.

Both the COP15 (Conference of Parties 15) and the COP27 have emphasised that biodiversity is significantly affecting regional and global changes in climate. The implications for global health are becoming clear as access to clean air and fresh water, and stable quality food production is getting widely affected.
 

Well-being metrics

The pandemic has thrown open many vulnerabilities and fragilities of societies, grave health crisis, unequal burdens on least developed countries, uneven growth across countries, supply-chain disruptions, which have again necessitated the need for comprehensive discussion on the multidimensional nature of development encompassing environment, climate change, biodiversity, education, health, inequalities, and inclusiveness.

It would be desirable to review, compare, and assess existing work in the domain of well-being metrics to address these gaps. Well-being measurement requires looking at not only the functioning of the economic system, environment and ecological considerations, but also at the diverse experiences and living conditions of people. The framework may include dimensions such as income and wealth, and environment quality and subjective well-being. The needs may vary across societies. Some may need to capture issues associated with work-life balance and social connections and civic engagements while others may need to get details on job quality, housing, health, knowledge, and skills.

Choice of indicators should be based on data availability, consistency and comparability, input indicators vs output indicators, and stock vs flow indicators. Initially, we may focus on a smaller set of dominant indicators, including core aspects of well-being. We may develop dashboards that can be used for informed policymaking, allocating resources, and budgetary planning. This requires both technical and resource support from the developed countries and multilateral institutions.

International efforts
 

International organisations and research institutions have taken initiatives to develop multidimensional well-being measures. The Human Development Index of the United Nations Development Programme, followed by the Multidimensional Vulnerability Index, captures inequalities in access to health, education, and shelter, poverty, and gender disparities, The World Happiness Report, developed by the Sustainable Development Solutions Network, deals with how people evaluate their own lives.

The OECD (Organisation for Economic Co-operation and Development) launched the Better Life Index to capture well-being. There were attempts by the Research and Information System for Developing Countries (RIS) to develop a wellness index and dashboards in the context of the BRICS, incorporating traditional knowledge and integrated approaches to development.

Many G20 countries like Canada, France, Germany, Italy, Japan, Korea, Mexico, and the UK have taken initiatives in designing well-being indicators to meet their specific requirements. The United Kingdom Office for National Statistics has developed a “Measures of National Well-being Dashboard” aimed at monitoring “how we are doing” as individuals, as communities, and as a nation, and how sustainable this is for the future. The indicators include life satisfaction, feelings that life is worthwhile, happiness, anxiety, mental well-being, life expectancy, health satisfaction, unemployment rate, job satisfaction, crime rate, access to natural environments, low income, household wealth, etc. Other countries outside the G20, like Bhutan, Chile, Ecuador, New Zealand, Sweden, have also developed multidimensional development measures.

The way forward

The global community at various forums, including at G20, is exploring the scope for initiatives in support of orderly, just, and affordable transitions to achieve the objectives of the “2030 Agenda for Sustainable Development” in line with the United Nations Framework Convention on Climate Change, the Paris Agreement, and the Convention on Biological Diversity. As deliberations and reviews of the Agenda 2030 progress, the SDG 17.19 —— initiatives to develop such a measure of well-being to complement GDP ——should be reckoned on.

Chaturvedi is director-general, RIS, and Tadas is former executive director, IDBI. The views are personal