(Published as “GDP needs to be replaced with more meaningful indicators”)
Dr. Trevor Hancock
1 February 2022
Last week I described the growing global attention to the concept of a Well-being society and economy. The latter has already been the focus of work by several national governments. In particular, Aotearoa New Zealand was the first country in the world to develop and present a Wellbeing budget, as I noted in my June 9, 2019 column.
At that time Prime Minister Jacinda Ardern commented “while economic growth is important – and something we will continue to pursue – it alone does not guarantee improvements to our living standards”. This theme was taken up by the Finance Minister, who noted that instead of focusing on “a limited set of economic data”, with success defined by “a narrow range of indicators, like GDP growth”, this new approach measures success in line with New Zealanders’ values – “fairness, the protection of the environment, the strength of our communities”.
These themes have continued, with Budget 2021 “continuing to place the wellbeing of current and future generations of New Zealanders at the heart of everything we do”. The Budget starts by reporting on the wellbeing of New Zealanders, which “is underpinned by stocks of the four capitals as set out in the Treasury’s Living Standards Framework: human capital, natural capital, social capital, and financial and physical capital”.
Note that wealth is understood here in the same terms as is proposed by the UN and other important groups, in terms of inclusive wealth – it’s not just about the money.
Since then, several more governments have started down this path. An October 2021 update from the Wellbeing Economy Alliance (WEAll) notes “the Wellbeing Economy Governments (WEGo) group now consists of five key governments: Scotland, Finland, Iceland, Wales and New Zealand”. The update also mentions that both Canada and Norway have started some work on a wellbeing framework.
Here in Canada a start has been made by the federal government, which included a report, “Toward a Quality of Life Strategy”, in the April 2021 Budget papers. This was a result of the Mandate Letter for the Associate Minister of Finance directing them to “better incorporate quality of life measurements into government decision-making and budgeting, drawing on lessons from other jurisdictions such as New Zealand and Scotland.”
Gratifyingly, the Budget paper reports that public opinion research conducted by the Department of Finance in August 2020 (amidst the first wave of Covid) found that while just over half of Canadians “feel that stronger growth in Canada’s GDP is important to their day-to-day life”, more than 4 in 5 “feel that measures beyond economic growth” are important.
These other factors include “health and safety, access to education, access to clean water, time for extracurricular and leisure activities, life satisfaction, social connections, and equality of access to public services”, the Department noted.
So not surprisingly, “nearly three quarters (71%) of respondents feel it is important that the government move past solely considering traditional economic measurements like levels of economic growth, and also consider other factors like health, safety, and the environment when it makes decisions.” Clearly, the Canadian public is well ahead of the political and business elite when it comes to measuring progress and understanding what matters.
Of course, the government can also lean on and learn from many years of work on a Canadian Index of Wellbeing (CIW), now housed at the University of Waterloo. The Index creates a single number based on performance across eight domains of wellbeing and quality of life. Its most recent report, published in 2016, covered the period from 1994 to 2014. Over those 20 years, it found that while GDP grew 38 percent, the CIW only grew by 10 percent. Clearly GDP growth does not translate very well into improved quality of life.
While the development by the federal government of a quality of life framework is a useful start, what now needs to happen is for the government to replace the GDP with these more meaningful indicators, and start producing proper Wellbeing budgets
As the recently established Wellbeing Economy Alliance for Canada notes, “A well-being economy depends on a re-imagination of societal purpose that enshrines what makes life worth living and a thriving planet.” That is the sort of society we must strive for.
© Trevor Hancock, 2022
Dr. Trevor Hancock is a retired professor and senior scholar at the
University of Victoria’s School of Public Health and Social Policy