Broad Measures Of Economic Progress
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Although for many decades, it was customary to focus on GDP and other measures of
national income A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), Gross national income (GNI), net national income (NNI), and adjusted nati ...
, there has been growing interest in developing broad measures of economic well-being. National and international approaches include th
Beyond GDP
programme developed by the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
, the Better Lives Compendium of Indicators developed by the
OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
, as well as many alternative metrics of wellbeing or happiness. One of the earliest attempts to develop such an index at national level was
Bhutan Bhutan, officially the Kingdom of Bhutan, is a landlocked country in South Asia, in the Eastern Himalayas between China to the north and northwest and India to the south and southeast. With a population of over 727,145 and a territory of , ...
's Gross National Happiness Index and there are a now a number of similar projects ongoing around the world, including a project to develop for the UK an assessment of national well-being, commissioned by the Prime Minister
David Cameron David William Donald Cameron, Baron Cameron of Chipping Norton (born 9 October 1966) is a British politician who served as Prime Minister of the United Kingdom from 2010 to 2016. Until 2015, he led the first coalition government in the UK s ...
and led by the
Office for National Statistics The Office for National Statistics (ONS; ) is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the Parliament of the United Kingdom, UK Parliament. Overview The ONS is responsible fo ...
.


GNH

The Gross National Happiness (GNH) phrase was initially used as an off-hand remark by the King of Bhutan to indicate his lack of interest in western materialistic style of economic development. The implementation of the GNH philosophy was meant to prohibit TV and Jeans from becoming part of the culture of the Bhutanese population. Despite modernization of the GNH concept by Karma Ura, Up to date the GNH is seen by some to hide some values that are in contradiction to western lifestyle. In 2005, a US based think tank, the International Institute of Management, published a working paper followed by a policy white paper in 2006 calling for the implementation of GNH philosophy in the United States. The papers called for a secular and more scientific implementation of a public policy framework and econometric measurement tool also known as
Gross National Well-being Gross National Well-being (GNW), also known as Gross National Wellness, is a socioeconomic development and measurement framework. The GNW Index consists of seven dimensions: economic, environmental, physical, mental, work, social, and political. M ...
or GNW and launched the first secular global gross national happiness index survey. Despite, the differences in the visions, both papers credited the King of Bhutan for the inspiration. The American GNH framework and GNH Index Survey was referenced by various researchers and policy makers as an answer to the failures of unchecked capitalism and hyper-focus on GDP. Among the prominent proposals was a report to US congress, UK Prime Minister Office, and Government of Goa. Later happiness and well-being development frameworks were similar to the proposal. For example the Bhutan GNH Index published in 2012 after 2 years of research was not dissimilar from the first secular GNH framework and Index of 2005. The main difference was the addition of spiritual elements such as Karma and prayers indicators to fit the local Bhutanese culture. The Bhutan GNH philosophy was initially dismissed due to its generality and was considered as touchy-feely concept, but later taken seriously after it published an econometric framework.


Beyond GDP

In 2007, the
European Commission The European Commission (EC) is the primary Executive (government), executive arm of the European Union (EU). It operates as a cabinet government, with a number of European Commissioner, members of the Commission (directorial system, informall ...
, the
European Parliament The European Parliament (EP) is one of the two legislative bodies of the European Union and one of its seven institutions. Together with the Council of the European Union (known as the Council and informally as the Council of Ministers), it ...
,
Club of Rome The Club of Rome is a nonprofit, informal organization of intellectuals and business leaders whose goal is a critical discussion of pressing list of global issues, global issues. The Club of Rome was founded in 1968 at Accademia dei Lincei in R ...
,
OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
and WWF hosted a conference titled "Beyond GDP". The consensus was to widen measures of economic growth and come up with measures that can inform policy making. The conference was attended by over 650 policy makers, experts and social activists. Spurred by its success the European Union released a communication titled ''GDP and beyond: Measuring progress in a changing world'' that identified five actions to improve the indicators of progress in ways that make it more responsive to the concerns of its citizens: * Complementing GDP with highly aggregated environmental and social indicators * Near real-time information for decision-making * More accurate reporting on distribution and inequalities * Developing a European sustainable development scoreboard * Extending national accounts to environmental and social issues. Following this communication and its adoption by the European Parliament in June 2008, many European governments and policy makers have started work on developing new measures of economic development. In August 2013, the
European Commission The European Commission (EC) is the primary Executive (government), executive arm of the European Union (EU). It operates as a cabinet government, with a number of European Commissioner, members of the Commission (directorial system, informall ...
published th
''Staff Working Document on "Progress on 'GDP and beyond' actions"''
in which reviews what had been achieved on the five steps identified in the communication GDP and beyond: Measuring progress in a changing world. Some of the most significant actions taken include: * Th
European Statistical System
adopted the first set of indicators on 'quality of life and well-being' and it also decided for th
EU-SILC (EU Statistics on Income and Living Conditions)
to be the core instrument for building up such indicators. * The time taken to publish key environmental indicators such as greenhouse gas emissions has been shortened by as much as eight months by using advanced statistical methods to arrive at so-called 'early estimates', which have proven to be sufficiently accurate to inform policy decisions. Since 2012,
Eurostat Eurostat ("European Statistical Office"; also DG ESTAT) is a department of the European Commission ( Directorate-General), located in the Kirchberg quarter of Luxembourg City, Luxembourg. Eurostat's main responsibilities are to provide statist ...
has produced 'early estimates'—within four months—fo
CO2 emissions from energy use
* A consensus has not been reached on the EU Sustainable Development Scoreboard. However, a preliminary scoreboard of
resource efficiency Resource efficiency is the maximising of the supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively, with minimum wasted (natural) resource expenses. It means using the ...
indicators (REI) is currently being tested and discussed. * The EU actively supported the finalisation and adoption by th
United Nations Statistical Commission (UNSC)
of th
System of Environmental Economic Accounting (SEEA)
as the international statistical standard. * Since 2010, European statistics have been published on 'annual adjusted disposable income in purchasing power standards' and the quarterly 'real disposable income of households'. * Summary indices on poverty and human development have been calculated for all 277 European regions. In addition, the
European Commission The European Commission (EC) is the primary Executive (government), executive arm of the European Union (EU). It operates as a cabinet government, with a number of European Commissioner, members of the Commission (directorial system, informall ...
provides a list of different indicators that can be categorised into five categories : * GDP and other macro-economic indicators - provided by th
System of National Accounts (SNA)
* Enlarged GDP measures - include costs such as expense of
environmental degradation Environment most often refers to: __NOTOC__ * Natural environment, referring respectively to all living and non-living things occurring naturally and the physical and biological factors along with their chemical interactions that affect an organism ...
,
resource depletion Resource depletion occurs when a natural resource is consumed faster than it can be replenished. The value of a resource depends on its availability in nature and the cost of extracting it. By the law of supply and demand, the Scarcity, scarcer ...
or higher
income inequality In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes ...
. They provide a more accurate indication of a country's actual economic, environmental and social performance. * Social indicators – combine several aspects of social progress. *
Environmental indicator Environmental indicators are simple measures that tell us what is happening in the Natural environment, environment. Since the environment is very complex, indicators provide a more practical and economical way to track the state of the environment ...
s – relate to the environmental development and linked issues such as human health. *
Well-being Well-being is what is Intrinsic value (ethics), ultimately good for a person. Also called "welfare" and "quality of life", it is a measure of how well life is going for someone. It is a central goal of many individual and societal endeavors. ...
– include both subjective and objective measures to report on quality of life and life satisfaction.


Measuring national well-being in the UK

In 2010, th
Measuring National Well-being programme
was launched in the UK. It is led by the Office for National Statistics (ONS) and its aim is to develop accepted and trusted measures of the well-being of the nation. Following a national debate in 2011 asking “what matters” to the general public, the programme has published a series of releases on experimental methodology such as the value of the non-market production of households collected in th
''Household Satellite Accounts''
and ad-hoc analysis like th

release. It has also established a series of periodic publications. For example, th

and th

report are published annually. Th

report was first published in November 2012 and included th

which is being updated twice a year, with the May 2014 update being the latest. The wheel includes headline indicators in areas such as health, relationships, job satisfaction, economic security, education, environmental conditions and measures of 'personal well-being' (individuals' assessment of their own well-being). ] The programme will continue developing and improving the measurement of the well-being of the citizens in the United Kingdom in order to report on the findings to inform both public debate and policy-making.


World Bank

The
World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
suggests the usage of
Human Development Index The Human Development Index (HDI) is a statistical composite index of life expectancy, Education Index, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income i ...
(HDI) and the Gross National Happiness Index (NHI). The HDI is a composite index of # life expectancy at birth, as an index of population health and longevity, # knowledge and education as measured by the adult literacy rate and functions of school enrollment rate and # standard of living measured as a logarithmic function of GDP, adjusted to purchasing power parity. The NHI focuses on the spiritual and material development of human beings by focussing on the four pillars of sustainable development, preservation of cultural values, conservation of natural resources and establishment of good governance. The bank also notes suggestions made by President Nicolas Sarkozy for the modification of the definition of GDP that stops the social and cultural damage that the current definitions are leading to. The Bank also suggests Adjusted Net Savings as an alternative to GDP.


Suggested measures

Some other measures that have been suggested as a replacement of GDP are
Index of Sustainable Economic Welfare The Index of Sustainable Economic Welfare (ISEW) is an economic indicator intended to replace the gross domestic product (GDP), which is the main macroeconomic indicator of System of National Accounts (SNA). Rather than simply adding together all ...
(ISEW) as suggested by Friends of the Earth and Environmentally Sustainable National Income
eSNI
by Dr. Hueting. Numerous other measures have been suggested to supplement, not simply replace GDP, creating a "dashboard" of metrics to track the economy and well-being.


See also

* Bhutan GNH Index *
Disability-adjusted life year A disability-adjusted life year (DALY) is a measure of overall disease burden, representing a year lost due to ill-health, disability, or early death. It was developed in the 1990s as a way of comparing the overall health and life expectancy of ...
*
Economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...
*
Green national product The green national product is an economic metric that seeks to include environmental features such as environmental degradation and resource depletion with a country's national product. Criticism of gross national product The gross national ...
*
Gender Development Index The Gender Development Index (GDI) is an index designed to measure gender equality. GDI, together with the Gender Empowerment Measure (GEM), was introduced in 1995 in the Human Development Report written by the United Nations Development Progra ...
* Genuine progress indicator * Green gross domestic product *
Gross National Happiness Gross National Happiness, (GNH; ) sometimes called Gross Domestic Happiness (GDH), is a philosophy that guides the government of Bhutan. It includes an index used to measure a population's collective happiness and well-being. The Gross National Ha ...
*
Gross National Well-being Gross National Well-being (GNW), also known as Gross National Wellness, is a socioeconomic development and measurement framework. The GNW Index consists of seven dimensions: economic, environmental, physical, mental, work, social, and political. M ...
*
Happiness economics The economics of happiness or happiness economics is the theoretical, qualitative and quantitative study of happiness and quality of life, including positive and negative Affect (psychology), affects, well-being, life satisfaction and related co ...
*
Happy Planet Index The Happy Planet Index (HPI) is an Index (economics), index of human well-being and environmental impact that was introduced by the New Economics Foundation in 2006. Each country's HPI value is a function of its average subjective life satisfacti ...
*
Human Development Index The Human Development Index (HDI) is a statistical composite index of life expectancy, Education Index, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income i ...
*
Index of Sustainable Economic Welfare The Index of Sustainable Economic Welfare (ISEW) is an economic indicator intended to replace the gross domestic product (GDP), which is the main macroeconomic indicator of System of National Accounts (SNA). Rather than simply adding together all ...
*
Progress (history) Progress is movement towards a perceived refined, improved, or otherwise desired state. It is central to the philosophy of progressivism, which interprets progress as the set of advancements in technology, science, and social organization effic ...
* Progressive utilization theory *
Legatum Prosperity Index The Legatum Prosperity Index is an annual ranking developed by the Legatum Institute, an independent educational charity founded and part-funded by the private investment firm Legatum. The ranking is based on a variety of factors including wealt ...
* Leisure satisfaction * OECD Better Life Index * Post-materialism *
Psychometrics Psychometrics is a field of study within psychology concerned with the theory and technique of measurement. Psychometrics generally covers specialized fields within psychology and education devoted to testing, measurement, assessment, and rela ...
*
Subjective life satisfaction Life satisfaction is an evaluation of a person's quality of life. It is assessed in terms of mood, relationship satisfaction, achieved goals, self-concepts, and the self-perceived ability to cope with life. Life satisfaction involves a favorable ...
* Where-to-be-born Index * Wikiprogress *
World Happiness Report The World Happiness Report is a publication that contains articles and rankings of national happiness, based on respondent ratings of their own lives, which the report also correlates with various (quality of) life factors. Since 2024, the r ...
*
World Values Survey The World Values Survey (WVS) is a global research project that explores people's values and beliefs, how they change over time, and what social and political impact they have. Since 1981 a worldwide network of social scientists have conducted ...


References

{{Reflist


External links

;Institutions *European Union

*
OECD The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...


*Office for National Statistics (U

;Academic *London School of Economics

*Open University

*Oxford University (Health Economics

Economic growth