Is GDP the best measure of well being?

UK Prime Minister David Cameron has insisted his £2m plan to measure the nation’s happiness is not “woolly”.

sources--erutledge--bbc

BBC, 25 November 2010    Watch the video


Prime Minister David Cameron said economic growth remained the most “urgent priority” but he wanted a better measure of how the country was doing than GDP.

From April, the UK’s Office for National Statistics will ask people to rate their own well‐being with the first official happiness index due in 2012.

Labour also attempted to measure quality of life when it was in power but then prime minister Tony Blair abandoned the idea, after it proved too difficult to pin down.

But Mr Cameron, who first floated the idea of a “happiness index” in 2005, when he was running for the leadership of the Conservative Party, argues that gross domestic product (GDP) ‐ the standard measure of economic activity used around the world ‐ is no longer up to the job.

‘Distraction’
Launching the consultation on Thursday, he said: “We’ll continue to measure GDP as we’ve always done, but it is high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country’s progress.”

Politicians have long been tempted by the idea of a “happiness index”. Quoting former US senator Robert Kennedy, who said GDP measured everything “except that which makes life worthwhile”, he said the information gathered would help Britain re‐evaluate its priorities in life.

He also hit back at claims that he should be focusing solely on economic growth as the country tries to emerge from recession. He said the government’s “most urgent priority is to get the economy moving, to create jobs, to spread opportunity for everyone”.

“Without a job that pays a decent wage it is hard for people to look after their families in the way that they want, whether that’s taking the children on holiday or making your home a more comfortable place.

“Without money in your pocket it is difficult to do so many of the things that we enjoy.”

But he said the government also had to focus on the long‐term and he said “the country would be better off if we thought about well‐being as well as economic growth”.

GDP was too “crude” a measure of progress as it failed to take into account wider social factors ‐ he cited the example of “irresponsible” marketing to children, an immigration “free for all” and a “cheap booze free for all”, which had all boosted economic growth at the expense of social problems.

‘Bottom line’
He admitted measuring happiness could be seen as “woolly” and “impractical”. But he said a new measure of national well‐being “could give us a general picture of whether life is improving” and eventually “lead to government policy that is more focused not just on the bottom line, but on all those things that make life worthwhile”.

He said he wanted Britain to be “in the vanguard” of efforts around the world to change the accepted measures of national progress “rather than following meekly behind”.

The Office for National Statistics will lead a debate called the National Wellbeing Project which will seek to establish the key areas that matter most to people’s wellbeing.

Potential indicators include how people view their own health, levels of education, inequalities in income and the environment.

National Statistician Jill Matheson said: “There is no shortage of numbers that could be used to construct measures of well‐being, but they will only be successful if they are widely accepted and understood.”We want to develop measures based on what people tell us matters most.”

She said questions would be added to the ONS household survey from next April ‐ but she wanted the public to help come up with sort of questions that should be asked. The first official measure of the nation’s well‐being would be published in summer 2012, she added.

The UK government is not the first to seek better measures of progress than GDP ‐ the World Bank, European Commission, United Nations, and Organisation for Economic Co‐operation and Development have all made the same commitment.

Trade union Unite attacked the plan as “another attempt by the coalition to pull the wool over peoples’ eyes”. General Secretary elect Len McCluskey said: “No doubt Cameron will use the index to claim that despite rising unemployment, home repossessions, longer NHS waiting lists and unaffordable education, the people of this country are happier under Tory rule. The reality is a gathering gloom.”