Getting well-being right

Will the growing interest in measuring well-being rather than simply economic growth eventually lead to a shift in official statistics?

Easterlin's paradox is the term given to the breakdown in the correlation between economic growth, individual affluence and well-being in well-off countries. The idea that getting richer doesn’t necessarily make us happy has moved from the status of homespun philosophy or anti-capitalist critique to mainstream thinking in a few years. Backing for a redefinition of national progress has come from happiness researchers like Richard Layard, has been reinforced by the environmentalist critique of economic growth and has received more support from the work of Kate Pickett and Richard Wilkinson, which seems to demonstrate that social equality is a more important determinant of aggregate well-being than disposable wealth.

Now the critique of GDP has been put on an official footing, al least in France, with a major study commissioned by President Sarkozy from a team of internationally renowned economists headed up by Joseph Stiglitz.  I won’t go into the report in detail - there are plenty of stories about it on the net and the full report is available here. Sarkozy says he will act on the report by changing the official measures of progress used in France and he intends to make the case for wider international adoption. When he does, his fellow leaders are likely to say they already use a more balanced set of indicators. The tiny kingdom of Bhutan may be the only one that claims to put its happiness index at the heart of policy, but even in Britain there was a much derided attempt in the early years of New Labour to develop of quality of life index (its credibility was somewhat undermined by it being the ministerial responsibility of John Prescott, not someone one naturally associated with well-being).

I doubt whether GDP will ever be replaced. It measures one facet of progress and is an important, albeit imperfect, indicator of what is happening in the formal economy. But it would be powerful if we could develop a small number of other recognised indicators of well-being that got at least some of the recognition that attaches to GDP. Having said which, well-being indices should never be uniform. One of the points made in the Stiglitz study is that people in different countries have different accounts of the good life. For example, American women apparently prefer walking as a past time to making love, while French women are the reverse. The process of deciding what are the most important components of well-being can be valuable in itself. It involves asking what kind of citizens we want to be, a question which the RSA is exploring in its future citizens project with Peterborough.

The balancing act of developing credible well-being indices is to be sufficiently robust and consistent to be respected at home and abroad while allowing the flexibility for different populations to decide what it is that most matters to their quality of life.