Beyond growth: If adopted and mainstreamed by governments, wellbeing could prove a better tool to assess progress

C limate crisis and the destruction of the biosphere, the Covid pandemic, financial crises, persisting poverty, social exclusion and increasing inequality and societal polarisation all clearly demonstrate the limits of policies building predominantly on GDP as the most important yardstick of a country’s economic performance and overall progress. 

 

Human wellbeing is plural; it can hardly be summed up and governed with one single metric, and needs to be approached from different angles.

 

Despite the growing interest in wellbeing and moving beyond growth, GDP and its growth remain the most important economic indicators that serve as a gauge of the overall state of an economy, with policymakers relying heavily on this indicator to form economic policy decisions, from fiscal to monetary policy.

 

 

In the shifting paradigm, economic growth is no longer seen as an end in itself, but a means to achieving wellbeing. It therefore requires identifying an alternative set of indicators that can better measure, monitor and steer policies into the right direction.

 

Environmental and social aspects are already reflected in many public and

private decisions, but they need to be further mainstreamed. This more holistic concept of wellbeing can help guide European societies through the current "polycrisis" and transitions - themselves complex processes.

 

To progressively complement the use of GDP with wellbeing indicators in EU policymaking, the European Commission is working on an integrated approach to develop a framework and propose metrics for capturing sustainable and inclusive wellbeing.

 

The framework aims to account for wellbeing today, resources for future

wellbeing within planetary boundaries, resilience, intergenerational fairness and

inclusiveness. Corresponding metrics, including a holistic indicator dashboard and augmented GDP measures, are being developed.

 

The availability and use of such metrics would help demonstrate the progress of well being inside and outside the EU, highlighting in particular the contributions of environmental, health or social policies to people’s wellbeing beyond the traditional economic perspective.

 

 

This is most helpful for informed and relevant international comparisons. For example, whereas the recent Draghi Report on EU competitiveness points to a deteriorating economic position of the EU vis-a-vis main international competitors, looking into aspects such as inequality and health may help to grasp the bigger picture when comparing the quality of life in different areas.

 

Indeed, a recent paper by the UK Office for National Statistics shows that productivity can evolve very differently if its scope is broadened from gross economic production (GDP) to include non-market production and costs of environmental degradation.

 

These wellbeing metrics would also facilitate the communication of political challenges and the options to address them in a people and planet-centred manner, while ensuring that economic growth does not destroy its very foundations and that today’s policies do not disadvantage future generations. This latter aspect is strongly featured in the new political guidelines, including the designation of a commissioner on intergenerational fairness.

 

Finally, they could provide better tools to assess progress towards sustainability and social fairness in their multiple dimensions if adopted and mainstreamed by governments.

 

This agenda links closely to the UN’s recently adopted Pact For The Future, which commits to develop a framework on measures of progress on sustainable development to complement and go beyond gross domestic product.

 

Given the inherent fragmentation of policy areas, sustainable and inclusive wellbeing indicators could provide a more complete and coherent picture, emphasising the impact of policies across different areas on outcomes that matter to people’s and the planet’s wellbeing. These are currently not considered in a holistic way in routine policy analysis. 

 

 

Such indicators can play an important role at various stages of the policy cycle, from agenda setting to policy monitoring; including through influencing public debate on strategic priorities and emergent issues. As alluded to, the ongoing European debate on the economic gap, lag or even falling behind of the EU with respect to the US and China is mainly informed by standard economic indicators such as gross GDP per capita. 

One should not forget, however, that during the same period, according to the Draghi Report, the "EU’s approach has delivered outstanding outcomes in terms of governance, health, education and environmental protection".

 

It is thus important for EU institutions and member states to discuss the current state and future of European prosperity from a wellbeing perspective, developing and defending European wellbeing. Many dimensions of wellbeing coexist in the EU, but two priorities arise from the broader notion of wellbeing that can be found in the academic literature (for instance the 2009 Stiglitz report): health and cooperation.

 

Theories of human essential needs insist on the centrality of biological and mental health while theories of evolution insist on the centrality of cooperation for human prosperity. Cooperation is a distinct human ability while health connects humans to the biosphere and the life it harbours according to a principle of interdependence.

 

These two dimensions are prominent in most human needs theories (such as Maslow’s "hierarchy of needs" pyramid and its subsequent refinements). Promoting health and cooperation is fully in line with European values.

 

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Find out more An excerpt of The Wellbeing Economy: Beyond GDP and Beyond Growth, by the Joint Research Centre, the European Commission’s science and knowledge service. Published under the Creative Commons license. The authors are Eloi Laurent, OFCE/ Sciences Po, Stanford University, Ana Boskovic and Peter Benczm; directorate B, unit BI, Joint Research Centre