Does GDP make us happy?
"It is accepted now that high economic growth rates do not necessarily translate into positive social developments but, for lack of consensus on what we should be measuring instead, our leaders remain obsessed with it."
Fernando Henrique Cardoso calls for a rethink on how we measure economic success and social wellbeing. If measuring the GDP growth of individual countries gives a very limited outlook, what do we replace it with? Pedro Telles, Sara Svensson, Esther Agbarakwe and Gro Harlem Brundtland offer their responses.
I look forward to welcoming you all to Brazil next month for the Rio+20 conference.
While I haven’t yet met the ‘Youngers’ (except Pedro, whom I met by chance two weeks ago!), I have been told by my fellow Elders that you are a remarkable group. I am very pleased to be joining this debate with all of you at this important time.
I noted that last week’s discussion was about achieving change. But let me suggest that there is a vital step right before change can happen, which is for people’s thinking to evolve. In other words, to build a vision of the future that questions people’s fundamental beliefs – and makes clear the need for change.
My first question to you is this: what ideas and assumptions do we most urgently need to challenge?
Brazil is an interesting example, and it is fitting we should be meeting here in June to make progress towards sustainable development. I have said before that, for better or for worse, the fate of Brazil will be strongly linked to this moment in our humanity’s history.
We are a democracy, an open society with a vibrant civil society enjoying strong economic growth, but we are also facing enormous social and environmental challenges with dramatic human impacts: youth unemployment, corruption, violence, inequality, poverty and the degradation of our rainforests.
It is a moment of both huge opportunity and danger. But it is also as if two different histories of my country are being written at the same time.
“The GDP growth of a country will tell you very little about how countries’ fates are all interconnected.”
At a time when we need to make life-and-death decisions on the future of our planet, such confusion is deeply worrying. It tells us we need tools to show that these two stories are not separate.
Our reliance on measuring GDP growth is a perfect example of this. It is accepted now that high economic growth rates do not necessarily translate into positive social developments but, for lack of consensus on what we should be measuring instead, our leaders remain obsessed with it.
Crucially, this narrow focus tells us nearly nothing about our successes and failures in assuring human wellbeing and environmental protection. Moreover, the GDP growth of a country will tell you very little about how countries’ fates are all interconnected. It is not designed for the deep challenges we face together: the threats faced by the lush rainforests of Brazil are interconnected with the expanding, roaring factories of China, America’s automobile industry and a million other issues, but we struggle to find better tools that capture the whole picture; that both improve our knowledge and change fundamentally the way we think.
I am sure you have spent many waking hours reflecting on this, and I look forward to hearing your ideas. What tools do you think we need to understand how our societies are performing?
And how can we ensure that these tools help promote greener, fairer and more sustainable economies?
Dear Fernando H Cardoso and all,
This matter has been under discussion for a long time now, and it is clear that GDP is not an adequate indicator of either development or happiness.
In fact, GDP was never meant to be used for that: limited to the economic sphere, it was conceived only as way to measure production connected to markets, and doesn’t take into consideration our stocks of natural resources or the ideals we share in our societies. Producing guns and weapons of mass destruction increases GDP, as well as fostering unsustainable consumption patterns that generate economic growth today by leaving insufficient means for future.
At the same time, knowledge and information shared for free are not considered in GDP calculations; neither are any sort of voluntary contributions to society. GDP does not measure issues such as inequality, violation of human rights and protection of the environment, nor does it give us as any indication on how economic activities affect them.
“Knowing only that we have a problem is not enough to be able to solve it.”
Unfortunately, due to the prevalence of a very limited concept of progress, GDP became the main measure of “success” for our societies. And, when Fernando Henrique says that we still hold on GDP for lack of consensus on what we should be measuring instead, I see that the main reason for that is not the absence of alternatives, but the absence of courage from our leaders to recognise that governments must be more worried about (and charged by) the state of other variables.
In this context, Rio+20 brings us an important opportunity: one of the outcomes of the conference may be the creation of a commission that will work on new ways to measure development globally, considering economic, social and environmental variables and the connections between them. We must not postpone a decision on this subject anymore.
So how can we use this opportunity wisely?
First, we need to change our mindset. Today, with GDP at the top of the agenda, the main question among our leaders is: “What must we do to keep the economy growing?” – and without considering social and environmental variables, this has led to countless policies that go against fairness, equality or preservation of the environment. As I said before, we need an economy that exists to serve the people and preserve the environment, and the new indicators must help us get there.
Second, we must not be shallow. Sustainable development involves many variables, and complex connections between them. Being so, a handful of simple separate indicators won’t be enough, as we need a holistic approach to the issue. Also, it must be considered that each society has its particularities; therefore metrics must leave room for adaptations.
Third, our tools must include ways to identify structural causes of the problems and who or what is responsible for them. Knowing only that we have a problem is not enough to be able to solve it.
And to strengthen our demand for change, we can use real examples: which advancements have been achieved by groups and societies that already use more adequate ways to measure development and happiness?
I look forward to hear from all of you!
Humans have organised into societies and invented economy. We can start by asking a basic question: Why do we want a society and economy at all?
I think that the purpose of our societies, politics and economics is for people to help each other and increase our wellbeing in harmony with nature. But is our economy really doing that today? It seems like we have lost track of what really matters, and turned ourselves into slaves under the system. We strive to make our economies grow as if GDP was a goal in itself, but wealth alone can never ensure people’s wellbeing.
We need to refocus on what makes us happy and healthy and brings harmony to the world. Happiness research is a growing field, and we should use that knowledge to decide what to measure.
Young people and the 'green economy'
“In addition to economic capital, we need to pay attention to ecological, social and human capital.”
Young people deserve to live in a society that values people and the planet higher than artificial numbers. Our lives do not get true meaning through material consumption and stressful jobs in industries that destroy the planet. Young people who enter the workforce want green jobs that contribute to sustainability so that we can be proud of what we are spending most of our waking hours doing.
In addition to economic capital, we need to pay attention to ecological, social and human capital. By focusing on the formal and non-formal education of young people among other forms of capacity-building, we can build the human capital of individuals and increase well-being and happiness in our societies.
Green economy, in the context of sustainable development and poverty eradication, is one of the themes of Rio+20, and the Major Group for Children and Youth which I’m part of has developed a policy position on green economy to lobby for in Rio.
Today, 5 June, is World Environment Day and the theme that UNEP has proposed for this year’s global celebrations is ‘Green Economy: Does it include you?’ People around the world have registered almost 9000 activities that will be carried out in this context, so there will be a lot of engagement beyond the UN. In Nairobi for example, a community based youth group called the ‘Mathare Green Heroes’ will meet up with staff from UNEP to conduct a waste collection activity and discuss what green economy means to them.
Dear Fernando H Cardoso,
Some years ago, I read an article that said Nigerians were the happiest people on earth. In spite of the many troubles and challenges facing ordinary Nigerians, people were happy – we believed that Nigeria is a rich country, albeit with her own ‘unique’ challenges.
I don’t think that is the case now.
Although Nigeria's economy is projected to continue growing, poverty is likely to get worse as the gap between rich and poor in Africa's largest oil producer continues to widen. Earlier this year, the National Bureau of Statistics released a report saying that the percentage of Nigerians living in absolute poverty - those who can afford only the bare essentials of food, shelter and clothing - rose to 60.9 per cent in 2010, compared with 54.7 per cent in 2004.
Here is a big contradiction: despite the fact that the Nigerian economy is growing, the proportion of Nigerians living in poverty is increasing every year. As Pedro said, it is clear that GDP is not an adequate indicator of either development or happiness.
Will the green economy help transform the livelihoods of people in poverty?
“The prospects for poverty reduction and economic growth ultimately depend on individual livelihoods and opportunities.”
Many young people are beginning to understand what 'green economy' is when it is directly related to green jobs. Green jobs will protect the environment and it will provide income; income in turn will provide stability, an escape from poverty, the opportunity for young people - young men and women - to be empowered to make informed decisions about their lives. This is what my peers and I have been saying, tweeting and campaigning about. (However, one great obstacle persists: corruption. Corruption at all levels of governance, if not checked, will diminish these efforts to reduce poverty and improve livelihoods.)
As the world has already reached the 7 billion population mark, I worry about my country Nigeria. With over 160 million people, we have the highest population on the continent, followed by Ethiopia. Our economic growth, measured by GDP, is not helping to improve development. How do we tackle rising poverty?
The prospects for poverty reduction and economic growth ultimately depend on individual livelihoods and opportunities. For me, gender equity is a particular priority. Meeting women’s needs for family planning would avoid numerous pregnancy-related complications that can prevent women from making a living and put a strain on household incomes.
Thus for Rio+20, It is essential that the outcome document addresses young people’s sexual and reproductive health and rights, as this is fundamental to their livelihood and well-being, in the context of sustainable development – as agreed to by governments just a few weeks ago during the 45th Session of the Commission on Population and Development.