Leigh Crowley is a Project Associate in the Government Outcomes Lab at the University of Oxford, and a Doctoral Candidate in Policy Research and Practice at the University of Bath.
For many of us the New Year is a time of self-reflection. We make resolutions to do more of things that make our lives more meaningful and joyous or make the necessary changes to the perceived negative aspects of our lives. In the spirit of New Year’s resolutions, I propose that we should collectively take well-being more seriously.
It has been a little over 50-years since then US Presidential candidate Robert Kennedy famously said that gross domestic product (GDP) measures everything apart from what makes life worth living. In the half-century following this statement GDP continued and continues to be the dominant way we measure growth.
In a recent speech at Chatham House Prime Minister of Iceland, Katrín Jakobsdóttir, provocatively quoted an Icelandic poet when critiquing GDPs inability to measure the meaningful things in life: “having sex with your wife does not contribute towards GDP but having sex with a prostitute does”. We all know where the true ‘value’ is in this quote. Or at least we should do. To my mind, these statements raise two fundamental questions: 1. Are we measuring the right indicators when we are thinking about growth? and 2. Do we all experience the outcomes of growth equally and in the same way? If the answer to these questions is ‘no’ are there potential alternative measures we should consider and how might they be used by policymakers?
“Not everything that counts can be counted, and not everything that can be counted counts” – Albert Einstein
Even the most casual observer of current affairs will note that GDP dominates discussions of a nation’s economic performance, but what are we actually talking about? GDP essentially captures all the formal monetary transactions within a nation over a period of time - the total value of goods and services produced. In standard economic theory the pursuit of GDP growth is not only considered positive but natural.
To the first question, are we measuring the right indicators when considering growth? GDP has a restricted view of what ‘counts’ as a valid growth enhancing activity. For instance, when no money is exchanged there is no growth. I would contend that a stay-at-home parent raising a child indisputably contributes towards the betterment of the life of that child, and potentially to the broader society. Yet, this valuable contribution is not reflected in GDP measures. The same challenge can be put to numerous other activities that provide individual and collective value. Moreover, we derive immense value from subjective indicators rooted in our personal experiences such as our relationships, health, education and the environment. As Robert Kennedy said over 50-years ago, these are the experiences that make life worth living!
Even if we accept that the only way to measure growth is GDP, this raises our second question: do we experience growth outcomes equally and in the same way? The short answer to this question is no. Thomas Piketty’s Capital in the Twenty-First Century shows that wealth inequality has been rising sharply since the 1970s, and that the majority of the share of GDP growth is going to the top 1% of earners. An example of extreme wealth inequality is that in the UK, the top six richest people have more wealth than the bottom 13 million people combined. A certain level of wealth inequality is tolerable, and perhaps even desirable, yet at current levels it has perverse effects on our well-being across all sections of society. Richard Wilkinson and Kate Pickett’s book The Inner Level demonstrates that wealth inequality is linked to increasing numbers of people experiencing mental illness and anxieties. In contrast, they highlight that more equal societies have reduced instances of mental illness and higher levels of overall well-being.
“Growth alone does not lead to a great country. So it’s time to focus on those things that do” - Jacinda Ardern, Prime Minister of New Zealand
In recognition that GDP measurement is only telling a small portion of the growth story, the governments’ of Finland, Iceland, New Zealand and Scotland are leading the charge to a move towards alternative well-being measures in order to gauge the temperature of their respective country’s progress. The New Zealand’s 2019 well-being budget prioritises investment in well-being indicators such as: civic engagement and governance; cultural identity; environment; financial and physical capital; social connections and time use.
Measuring progress as well-being requires us to re-imagine what we mean by growth; well-being measures in this sense reflect our real-world experiences and values. While to some readers this move might seem unhelpful at best and perhaps even meaningless for policy, even the most hard-headed reader should welcome a move to well-being measurements. Abhijit Banerjee and Esther Duflo – winners of the 2019 Nobel Prize in Economics - argue in their book Good Economics for Hard Times that there are “no iron laws of economics keeping us from building a more humane world”. Kate Raworth’s book Doughnut Economics follows a similar argument, by outlining the ways in which traditional growth measurements are failing us and that a focus on a minimum social foundation is indeed in the interest of the rich too.
At the heart of New Zealand’s well-being budget is the recognition that there is a failure to address complex social issues through traditional ways of working. The government of New Zealand claim their well-being budget has “broken down the silos of government to support programmes that bring together agencies to solve the big challenges of our time” (2019, p. 3). The Government Outcomes Lab’s research focuses on how innovation and collaboration can be used to tackle the most intractable complex social issues to improve outcomes for service users. It would appear that the emerging field of well-being measurement for policy is both innovative and collaborative in nature – it might even lead to ‘better outcomes’? The GO Lab welcomes a conversation on how useful you think well-being measures are. Do you think that well-being should be used to orientate the national budget around as we have seen in New Zealand, or do you think a shift to well-being measures is a luxury that only small high-income countries can afford?
I leave you with this New Year message. It is perfectly fair to say that well-being measurement is an incomplete picture, and subject to multiple biases, but as we saw above, GDP is failing us too. Perhaps there is no perfect alternative to GDP. Though this New Year, let’s try to be more considerate of how we can impact well-being of those around us – and pay more attention to how the big players fulfil their promise of serving citizens.
This blog was originally posted via the Government Outcomes Lab on 6 January 2020.