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UK Measuring Well-Being to Guide National Policy

January 28, 2011

Improving peoples lives — I am all for it! Yes! magazine reports today the United Kingdom is actually going forward with enlightened thinking and action regarding measuring the British peoples well-being and how national policy should be shaped accordingly to improve people’s lives. This is progress. Jolly good!

In November, UK Prime Minister David Cameron announced that, to help guide national policy, the British government would begin to measure the subjective well-being of its citizens. The announcement was the latest evidence of a growing awareness among governments and economists that Gross Domestic Product (GDP) and other traditional metrics of economic progress fail to measure the kind of progress that makes life better.

The British government’s decision to measure subjective well-being (rather than, say, objective measures of mental and physical health) underscored the growing debate about what measurements should replace the outdated focus on economic growth.

The Problem with GDP

Cameron explained that the change was about “measuring our progress as a country not just by how our economy is growing, but by how our lives are improving . . . not just by our standard of living, but by our quality of life.” Indeed, GDP was never intended to be used as an indicator of social progress. Simon Kuznets, the economist who helped the U.S Department of Commerce standardize the measure of gross national product , acknowledged that “a nation’s welfare can scarcely be inferred from a measurement of national income.” GDP can go up even in times of suffering: when a country is hit by an earthquake, GDP may increase because of the extra spending on reconstruction. High levels of illness bump drug sales and hospital bills, leading to an increase in a country’s economic activity. But for the last 60 years, GDP has been the main tool in the measurement of people’s well-being.

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