There is general agreement that GNP alone is a poor measure of how well we are doing. It is limited to measuring the flow of money only, whether it is used for wars or schools, and it leaves out many other factors equally or more important to our well-being.
A good index would probably include some of the following:
- Money flow
- A factor similar to GNP although adjusted for whether we want (a) more, (b) same or (c) less spending in a certain sector of the economy. For instance, money spent/made on developing sustainable energy technology would increase the index, and money spent/made on depleting the ecosystem would count as minus. Increased spending on health care would count as plus in a developing country, but may count as neutral or even minus in another country if it means that the system is moving in a less efficient direction.
- Ecological impact and wealth
- The Ecological Footprint of the nation or another population. An EF lower than our fair earth share counts as plus, and an EF higher counts as minus.
- The health and wealth of the current ecosystem – size, diversity, vitality
- Social and health factors
- The quality and accessibility of health care
- The quality and accessibility of clean water, air, food, shelter
- The quality and accessibility of education, work
- Expected life length
- Measures on satisfaction and well-being (reported satisfaction, depression, suicide)
- Time spent on work vs family and other activities (if work more than 30-40 hours a week, may be counted as minus)
- Political and religious freedom, human rights
- Income and wealth distribution – how fairly is the wealth spread, what is the gap between the richest and the poorest (this is an important indication of many other quality of life factors)
- Cultural vitality, however that is measured!
This list shows the reason why GNP is used: it is simple and easily quantifiable. These more comprehensive measures can be quite complex, and at times controversial, but they still give us a better indication on how we are doing in the areas really important to us.
I was reminded of this topic when I heard of Norway, my home country, appearing on the top of the UN list of best countries to live in. And then when I later came across a new measure for me, the Happy Planet Index. (See also this article from The Guardian.)
Norway appears, for good reasons, near the top of many measures of quality of life. We have excellent health care, education and quality of living, and a more equal distribution of wealth most other countries. Since large areas of the country is sparsely populated, I assume it also rates reasonable well on the health of current ecosystems. (Apart from the nasty business of over-fishing, and not much genuine old growth forest.) But when the Ecological Footprint is included, Norway is not doing so hot. If everyone lived as us, we would need three Earths, and we also contribute significantly – through the petroleum industry – to global pollution and the greenhouse effect.