Background

From the very beginning of its existence, Gross Domestic Product (GDP) was never intended as a measure of progress or well-being. Its co-creator Simon Kuznets himself warned ‘the welfare of a nation can … scarcely be inferred from a measurement of national income as defined above.’ And yet, many policy makers, the public and the media have treated it precisely as such. From at least as early as the 1960s, there has been concern about this interpretation of GDP, both from politicians such as Senator Robert Kennedy, and from academics and other indicator-producers. Key areas of concern include technical economic critiques of GDP, the growing acknowledgement that GDP and similar measures tend to distract attention from ultimate outcomes such as people’s experiences of their lives, and rising awareness of the need to assess environmental impact.

Early alternative indicators, such as the Level of Living Index, emerged in the 1960s, often focused on developing countries. For the creators of these indices the point was to highlight the importance of dimensions other than economic growth for development. These indicators focused on objective living conditions, creating composite measures for a range of dimensions. The leading exemplar of this approach is perhaps the UN’s Human Development Index, launched in 1990. Meanwhile, in Europe and other wealthy nations, the Social Indicators movement developed in the academic community, trying to better measure non-economic aspects of society. In 1974, the journal Social Indicators Research was founded. Subjective indicators began to be considered from this point onwards, with seminal papers such as Richard Easterlin’s questioning of the relationship between economic growth and happiness. Coherent attempts to assess environmental impact developed much later, with the ecological footprint being the best known single indicator, whilst environmental accounts are a reality for most European statistical offices.

Momentum began gathering around alternative indicators at the beginning of this century. The Australian Statistics Office, the ABS, launched their Measure’s of Australia’s Progress in 2002.  In 2004, several academics, such as Professor Ed Diener began calling for official assessments of well-being. In 2006, nef launched the Happy Planet Index, which had worldwide reach. The OECD began a series of international conferences which included the signing in 2007 of the Istanbul Declaration calling for the developing of alternative indicators of progress by leading supra-national organizations including the UN, the European Commission and the World Bank. Meanwhile, Bhutan had begun developing its concept of Gross National Happiness.

In 2007, the European Commission and European Parliament organized the Beyond GDP conference, which kickstarted their engagement with the agenda.  In the same year, Eurostat, the European statistical agency commissioned a study to explore the feasibility of Well-Being Indicators for Europe.

In 2008, the French President Nicolas Sarkozy set up the Commission on the Measurement of Economic Performance and Social Progress, lead by renowned economists Joseph Stiglitz and Amartya Sen, and including 4 Noble Prize winners. The Commission (often called the Stiglitz-Sen-Fittousi Commission, or SSF Commission) reported in September 2009, calling for the measurement of progress to move from production to well-being. Weeks before, the European Commission had released its GDP and Beyond Communication, which identified five key steps needed to go beyond GDP.

These two reports are widely seen as having lead to a step change in the Beyond GDP agenda. In September 2010, the Director Generals of the European National Statistics Offices (DGINS) signed the Sofia Memorandum to affirm their general agreement with the output of the SSF Commission.   Eurostat continued its work in the area, setting up with INSEE (the French Statistics Office) the Sponsorship Group on Measuring Sustainable Development, Well-Being and Sustainable Development, to continue the work of the SSF Commission, which reported in November 2011. Meanwhile, several countries, including the UK, Germany, Italy, Japan and Spain all began initiatives to consider how to measure well-being. The UK’s Measuring National Well-Being programme, which started in November 2010, is particularly notable for the support it has received from the Prime Minister David Cameron, and the government’s commitment that it intends to use measures of well-being to shape government policy.

Whilst most activity has taken place in Europe and the English-speaking world, several initiatives have also emerged in the Global South, including Brazil and Ecuador, where INEC (the Ecuadorian National Statistics Office) and the Department for Planning have committed to measuring ‘Buen Vivir’ or good living. In July 2011, the UN General Assembly passed a resolution, proposed by Bhutan, calling on member states to measure happiness and well-being.

  • Mike Salvaris

    One major project you have omitted from this otherwise excellent history is the Canadian Index of Wellbeing. The CIW can reasonable claim to be one of the most successful national projects of the past decade anywhere in the world, and in fact work on it, or its precursor, started in the late 1990′s. Details are on the CIW website.