Your money or your life? Putting wellbeing before GDP

In a speech in London this month, Iceland's Prime Minister Katrin Jakobsdottir added her country to those putting wellbeing before GDP in their budgets, calling for 'an alternative future based on wellbeing and inclusive growth'. Growth was considered not only essential but also positive, she said, 'but we need to think about how it is achieved and what does it cost?'Iceland has joined New Zealand and Scotland in a Wellbeing Economy Alliance to push a wellbeing agenda. In May this year, NZ Prime Minister Jacinda Ardern, announced what she said was the world's first 'wellbeing budget', prioritising mental health, domestic violence and child poverty

There are other signs of shifting political priorities. Commenting on the manifestos of the parties contesting the UK election, Guardian writer George Monbiot noted that an extraordinary feature of the election was that growth, for some parties, has almost become a dirty word. 'It is mentioned only twice in the Labour manifesto, both times with qualifications.' The Liberal Democrats had made a crucial breakthrough, he said, 'arguing that GDP should no longer be a government's central objective. Instead, it should focus on wellbeing.' This was a policy the Greens had been urging for years.

Are these, at long last, signs that Governments are getting the message that growth in GDP is a poor measure of national progress and people's welfare? If so, Australia can claim some credit. In 1997-98, CSIRO Australia, the national scientific research organisation, in collaboration with the Australian Bureau of Statistics (ABS) and the university-based National Citizenship Project, organised a conference and published a bookon 'Measuring progress: Is life getting better?'

The exercise was one of the most wide-ranging explorations of progress undertaken at the time. It spanned social, economic and environmental perspectives, and ranged from the personal scale to the global. It brought together leading researchers to discuss indicators of national performance, what they tell us about the quality and sustainability of life in Australia, and how they can be improved. It included responses by senior bureaucrats, academics and community representatives.

The ABS took the book and the idea to the OECD in Paris, which launched its own project, 'Measuring the progress of societies'. This interest spread to member countries, perhaps most influentially in France's Presidential Commission on the Measurement of Economic Performance and Social Progress, which reported in 2009 and prompted further work by the OECD (the OECD is also in the Wellbeing Economy Alliance). The ABS published its own reports on 'Measures of Australia's progress' from 2002, but the project was discontinued in 2014 because of funding cuts.

There were other elements of this development. For example, in the US, the organisation Redefining Progress developed the Genuine Progress Indicator, which showed a widely divergent trend from GDP. (Its founder, Ted Halstead, was a guest speaker at the CSIRO conference). Another element has been the growing interest in using measures of subjective wellbeing - happiness and life satisfaction - to measure and compare national performance.

I convened the CSIRO conference and edited and contributed to the book. I am also a co-author, with Professor Bob Cummins at Deakin University, of a national index of subjective wellbeing, which includes measures of both personal and national satisfaction, and was the first of its kind in the world. The index is being used in research projects around the world, and the 2003 paper describing it has been cited over 1,000 times.

The work on progress indicators is all well and good, especially in challenging the political priority given to GDP. However, over the years I have grown more sceptical of the possibility of measuring, accurately and fully, the state of nations and the wellbeing of their people. The work has always had its critics. One environmental scientist in the 1990s described indicators research as 'voodoo science', saying indicators are the consequences of an approach to understanding the complexity of the world which is fundamentally flawed, a pathological corruption of the reductionist approach to science. We needed to approach the complexity, the richness of the world, he said, with theory, data, models and tools which honoured that richness instead of subverting it, and acknowledged that complexity instead of denying it.

Our increasing knowledge of complex systems highlights these concerns. The 'holy grail' of a single index which accurately measures and compares how well nations are faring has proved elusive. It is now widely accepted that GDP does not do this and neither, I have argued, does subjective wellbeing. Assembling a growing number of component measures into an indicators set (regardless of whether or not these are aggregated into a single, composite index) does not solve the problem: the performance of a whole system cannot be derived from that of individual components. Nor do existing measures allow us to anticipate, and so prevent or prepare for, sudden, non-linear, and possibly irreversible changes which risk causing catastrophic failure.

Could it be, then, that the search for comprehensive and universally applicable measures of progress and development is scientific folly? A key lesson of my work has been to shift the emphasis of research away from the goal of developing better indices of progress, and towards using a much wider range of research to inform a more open-ended discussion about the meaning and purpose of progress. Research in this field has become over-quantified because of advances in computing and statistical analysis; numbers have become an end in themselves, a 'scorecard' of performance, rather than being used as one means of creating deeper, richer stories of humanity and its future.

Public perceptions of the future have been another dimension of my research. And I am not aware of any progress indicators that reflect the depth of people's concern (which existed well before climate change gave it a tangible focus). Here are some examples (referenced here) of poll questions that I and colleagues have posed (I have approached several domestic and international social research companies to rerun some of these questions, but with no success):

· Asked in a 2015 poll about quality of life in Australia, taking into account social, economic and environmental conditions and trends, only 16% of Australians thought life was getting better; 35% thought it was staying about the same; and 49% thought it was getting worse.