For most people alive today, Gross Domestic Product (GDP) is one of those unconsidered parts of our common consciousness that seems immutable. GDP is how countries size themselves up against their peers, how they measure progress.
And yet the U.S. Department of Commerce created GDP as a statistic only in 1942. With the measure’s current ubiquity, it is natural that the Department named the development of GDP and other national income indices as its “achievement of the century.” But the realization that GDP didn’t even exist 70 years ago begs the question of whether it will exist with its current cachet 70 years from now.
In recent years, a growing group of economists, academics, and others has argued that the answer should be “no.” This is not a climate issue, or even an environmental one, per se. If these campaigners get their way, however, there will be dramatic consequences for the climate and energy debate.
If a country’s ultimate responsibility to its citizens is to ensure and increase happiness and well-being, GDP is indeed an incomplete measure of a state’s performance. Variables such as engagement in fulfilling personal activities, social connectedness, political voice, and environmental conditions have been shown to greatly influence well-being but are not accounted for in GDP. Even Simon Kuznets, the eponym of the Kuznets Curve and the Nobel Prize-winning economist who is probably responsible more than anyone for the development of GDP as a statistic, cautioned in his first report to Congress in 1934 that, “…the welfare of a nation can, therefore, scarcely be inferred from a measure of national income…”
In 2008, French President Nicholas Sarkozy, calling for a “great revolution” in the measurement of economic progress, created the Commission on the Measurement of Economic Performance and Social Progress, which produced a report calling for new quality-of-life measures that include both objective and subjective components. So far, no concrete alternative to GDP has come from that effort, but initial attempts have popped up elsewhere.
Perhaps the most interesting comes from an unlikely source, ahead of his time. Bhutan’s former king Jigme Singye Wangchuck coined the term Gross National Happiness (GNH) in 1972 as he described his vision of development in accordance with Buddhist principles, with happiness of the people as the ultimate goal. GNH may not be the final answer to measuring well-being worldwide (after all, one criterion is how often you take account of karma in daily life). But as it has gained in notoriety and become more formalized—the Centre for Bhutan Studies has turned the concept into a detailed statistical measure—it has spurred discussion about what considerations governments should make when making development decisions. Cousins of the GNH include the New Economic Foundation’s National Accounts of Well-being and Happy Planet Index, and the Satisfaction with Life Index, developed by Adrian White at the University of Leicester.
The merits of these individual statistics aren’t particularly relevant to my overall point, which is that acceptance of this new way of accounting for progress will make it that much easier to present the case for preventing the effects of climate change and transitioning to sustainable energy sources. These new measures evaluate ecological damage and health alongside conventional monetary wealth in calculating well-being—as opposed to classifying them as externalities, the “with-the-band” category of economic analysis. Imagine a day when the debate over, for example, a new coal-fired power plant versus a wind farm, references the effects on GNH—air pollution, access to wilderness, water quality, and how they affect happiness, not wealth—rather than only GDP, and it is easy to see how a shift away from GDP would benefit the clean energy movement and provide a more complete perspective.
It should be noted that GDP and well-being are strongly correlated. People in the poorest countries are some of the least happy, and those in the richest countries are some of the most happy. But researchers have found that the correlation is far less strong once a wealth threshold is reached. Moreover, since World War II, levels of satisfaction have stagnated across the developed world even as incomes have increased dramatically. So while there is certainly a place for GDP in evaluating country performance, it cannot function as the sole measure of well-being once countries grow wealthier.
Many of the cultural changes that sustainability advocates are pushing for and that are described in detail in Worldwatch’s State of the World 2010: Transforming Cultures—prioritizing local business and reducing work hours, for example—would be bolstered by the use of a well-being framework. Instead of talking about whether the trade-off between a lower GDP and benefits that are less quantifiable is worthwhile, we could one day truly compare apples to apples, judging changes in wealth, sense of community, health, and personal fulfillment as aspects of happiness.
What the role of people in the energy and climate world should be in promoting this way of thinking is not clear. Insistence by some on referencing a well-being measure rather than GDP in the discussion of energy and climate might only increase the extent to which people on either side of the issue talk past each other. But regardless of its immediate impact, the ascent of well-being statistics as the measure of overall performance of a country—and its leaders!—is a trend that few in the climate and energy world are talking about yet, but one that would be a boon to advocates of change.