In search of an alternative to GDP that actually measures happiness and well-being
How do you really measure how a country is doing? Researcher Annegeke Jansen is looking for alternatives to gross domestic product (GDP) to assess the state of society. As an economist, she focuses on well-being, inclusivity, and a healthier environment. ‘The economy should be a tool to achieve those goals,’ she says.
There’s no denying that GDP is a useful metric for capturing the total value of an economy. But even the man who came up with the concept, Simon Kuznets, added a caveat back in the 1930s: don’t use GDP to measure a country’s success, he warned, because it wasn’t made for that.
Yet that’s exactly what we started doing in the decades that followed. ‘Especially from the 1960s onward, economic and GDP growth became goals in themselves,’ says Jansen, a PhD candidate at the Institute of Environmental Sciences (CML) in Leiden.
‘I’m convinced that well-being is the most important thing and that the economy is a means to achieve it.’
The biggest issue with GDP is all the things it leaves out: things that do matter for a country. How happy people are, for instance. Or how healthy. The state of nature. GDP says nothing about any of these. It’s often expressed per capita, but that gives little insight into inequality. Jansen: ‘The GDP per capita in the United States is much higher than in Europe. But if you look at the poorest half of the population, you’d much rather live in Europe.’
‘That’s just not how the real world works’
As an economics student, Jansen often felt frustrated by the assumptions made in class. ‘I kept thinking: that’s just not how it works in real life,’ she says. With that critical lens, she set out to find better indicators. ‘I’m convinced that well-being is the most important thing,’ she says, ‘and that the economy is a means to achieve it.’
Together with her supervisor Rutger Hoekstra, she examined which alternatives to GDP already exist. Many attempts have been made to complement it with other indicators, and those efforts are only increasing. Rather than adding yet another metric to the list, Jansen and her team studied how existing initiatives might reinforce one another. ‘Because no single indicator can capture everything that matters. You’d miss a lot of nuance.’
Rather than adding yet another metric to the list, Jansen and her team studied how existing initiatives might reinforce one another.
Their conclusion is that three things are especially important: current well-being, how that well-being is distributed, and what it means for future well-being. Around seventy existing metrics fit that framework.
A dashboard, led by the United Nations
Ideally, these indicators would come together in a ‘dashboard’, offering a fuller picture of how a country or society is doing. ‘GDP per capita could still be part of that,’ says Jansen, ‘but alongside numbers about health and happiness, for example.’ The distribution of well-being and the state of the environment would also need to count toward a country’s overall ‘score’.
Such a dashboard would need to be standardised, she adds. Because that’s one of GDP’s strengths: every country measures it in the same way. ‘We see an important role for the United Nations in developing something like this for well-being,’ Jansen says. She sees her research as a call to action for the UN to take the lead. While the UN does have the Human Development Index, it isn’t measured by countries themselves and includes relatively limited data.
Neoliberalism has reached its limits
According to Jansen, now is the time to take alternative metrics seriously. ‘Neoliberalism has reached its limits,’ she says. ‘We see that reflected in environmental degradation and in the inequalities caused by the way our economic system works.’
That doesn’t mean the challenge is easy. The pressure to keep growing is intense, Jansen acknowledges. Many economists still view growth as the main route to greater prosperity. Jansen: ‘And yet, we all sense that the way we’re doing things now isn’t sustainable. We need to restructure our economy if we want to ensure long-term well-being.’
Jansen’s research was published in The Lancet Planetary Health in September 2024.
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