Beyond GDP

Society as such has reached a point of transition. The Gross Domestic Product (GDP) was a useful metric last century but now it causes more harm than good. GDP is harming our society and planet because as a metric it is unable to capture the different shades of the contemporary society. Like it or not, we belong to a society, and therefore it is our responsibility to push politicians to upgrade the metrics they use.

The shortcomings of GDP (Gross Domestic Product) are known and documented. The GDP only computed the costs of the market activities leaving out less tangible elements such as the environment. Moreover, GDP it is not a reflexion of an individual person, but it is instead the aggregated value; thus preventing the assessment of individual’s welfare. The Gross Domestic Product is not able to capture the non-economical transactions (e.g. volunteering or substance agriculture) and in the non-market related activities there are the resources extracted from the nature. For example, there is no measure of the social and environmental impact of an open-pit mine including the depletion of natural resources and biodiversity loss.

There are some initiatives from the european union to take into account non-monetary metrics: Better Life Index, Regional Well-Being Index and Social Progress Index. To overcome this problems in 1972 the term Gross National Happiness (GNH) was coined. And during 2008, Bhutan set the GNH as a institutional goal in their constitution; thus leading the movement to move beyond the old-fashioned GDP.

The Gross National Happiness metric is composed by 9 domains: psychological wellbeing, Health, education, time use, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards (Fig 1). All the domains are weighted the same. However, there are 33 variables which have different relevance on the final outcome. As a general rule subjective indicators have been assigned lower weights than the objective (factual) ones.

The nine domains of GNH
The nine domains of GNH, Source: Provisional findings of 2015 GNH Survey, p. 11

Each of the domines consist on several questions to asses the interviewee on the specific domain. For example, regarding the education the interviewers ask about literacy, schooling, and knowledge about different areas. The living standards are measured through the indicators household income, assets, and housing. Whereas the psychological well-being is measured based on the life satisfaction, positive emotions, negative emotions, and spirituality.

All of these sounds tremendously appealing but Bhutan may be hardly comparable to the “west”. There the literacy is low and the GDP per capita is far beyond any European country. So, in conclusion, this is a metric that needs to be studied. It is also unsure whether happiness will make the world work but what it’s clear is that some more empathy and happiness in our society is not going to do any harm.

Leave a comment

Your email address will not be published. Required fields are marked *