The GDP does not adequately reflect the true health of a nation and needs to be replaced by more comprehensive measures. The GDP measures the nation’s economic performance because it is determined by the market value of all final goods and services and has been used since 1934. Using this measure exclusively has placed the U.S. at or near the top for decades. Yet, many experts today argue these measures are far too narrow to gauge the overall health of a nation and its people. And that presents a problem for the U.S.
Since the institution of GDP figures and country rankings, other measures of the quality of life have appeared. For example, The Organization for Economic Cooperation and Development (OECD) annually issues a report based on a study of 140 countries, indicating the levels of happiness in those countries. For at least the last decade, European countries such as Denmark, Finland, and the Netherlands and other countries such as Canada, Australia and New Zealand have ranked at the top and the U.S. has not made the top 10.
Why did some countries come out on top?
Certainly overall economic health has played a powerful role. For example, Denmark, which got the highest score, is not only a wealthy country, it's also highly productive with a 2009 GDP per capita of $68.000 (U.S.) according to the International Monetary Fund. In contrast, the U.S. GDP per capita was $47,335. But wealth alone does not bring the highest happiness score, according to the report. Norway had the highest GDP per capita at $98,822, yet it ranked 19th, not first. On the other hand, New Zealand, which was ranked 8th, had a GDP per capita of $30,556.
So what are other factors that may account for happiness levels? According to the British Medical Journal article by Dr. Tony Delamothe, research done in Mexico, Ghana, Sweden, the U.S. and the U.K. shows that although individuals typically get more wealthy during their lifetimes, they don't get happier. Rather, argues Delamonthe, family, social and community networks bring joy to one's life.
Another important factor is work-life balance. While the Scandanavian countries boast high GDPs, the average workweek in those countries is no more than 37 hours per week. In contrast, the average worker in the U.S. may be the hardest working employee in Western countries, according to the UN International Labor Organization, working far more hours now than a generation ago, with a negative net increase in the standard of living.
World experts on the subject of happiness, Dr. Ed Diener and Dr. Sonja Lyubomirsky and Dr. Martin Seligman, have concluded that beyond the basic level of necessities to support life, such as adequate, food, water, housing, the following things can increase happiness levels: meaningful close relationships; a positive, optimistic frame of mind; accepting responsibility for your life; being engaged in meaningful work; living in the present; and practicing an altruistic life, including gratitude, forgiveness and compassion.
Robert Kennedy in 1968 made this comment about GDP: “Our gross national product…counts air pollution and cigarette advertising and ambulances…It counts the destruction of our redwoods…Yet it does not allow for the health of our children the quality of their education or the strength of our marriages; neither our wisdom nor our learning; neither our compassion nor our devotion to our country which makes life worthwhile.”
Chris Meyer and Julia Kirby, writing in the Harvard Business Review Blog and authors of a forthcoming book, Standing On The Sun, argue that “exclusive reliance on economic measurement has aligned Western Capitalism around managing the financial resources that don’t create value.”
If we look at broad and varied data other than GDP, the picture for the U.S. is not rosy. According to the U.N., the OECD, The Legatum Institute, The U.S. National Intelligence Council, the U.S. Congress, the CIA and many business publications:
In their book, The Spirit Level: Why Greater Equality Makes Societies Stronger, Professors Richard Wilkinson and Kate Pickett, present data taken from multiple credible sources that show the gap between the poor and rich the greatest in the U.S. among all developed nations; child well being is the worst in the U.S. among all developed nations; and levels of trust among people in the U.S. among the worst of all developed nations.
The Subcommittee on International Organizations, Human Rights and Oversight of the U.S. Congress' House Committee on Foreign Affairs stated, after examining the issue of the U.S.'s declining image abroad, "the decline in international approval of U.S. leadership is caused largely by opposition to the invasion of Iraq, U.S. support for dictators, and practices such as torture and rendition. They testified that this opposition is strengthened by the perception that our decisions are made unilaterally and without constraint by international law or standards-and that our rhetoric about democracy and human rights is hypocritical."
A study commissioned by the American Psychological Association of people in both rich and poor countries to determine how much the average person’s happiness is determined by a combination of individual wealth, possessions and optimism. The led author of the study, Edward Diener, concluded “We’ve found that rising income does lead to rising happiness, but is depends on people being optimistic, not having sky-high desires, and the average person being actually able to afford more things. So income is helpful, but only in certain circumstances.” Diener goes on to argue “Our research contradicts this concept [rich people are happier].”
Another measurement of a country’s overall health is Mercer’s World’s Best Cities To Live In report. According to this report, the top cities were Vienna, Zurich, Geneva Vancouver, and Auckland, with the highest ranked U.S. city, Honolulu, coming in 30th place. Similarly, The Economist reports annually on the most livable cities in the world. Factors such as stability, health care, infrastructure and crime are examined in addition to economic activity. Vancouver tops the list of 140 countries along with 2 other Canadian cities, the European cities of Vienna, Helsinki, and Sydney, Australia and Auckland, New Zealand. No U.S. city made the top 20.
Robert Costanza, Mareen Hart, Stephane Posner and John Talberth are authors of a study for the Frederick S. Pardee Center at Boston University. They issued a report arguing for new measures beyond GDP to indicate a country’s progress. They GDP was never designed to measure national well-being. They contend “useful measures of progress and well-being must be measures of the degree to which society’s goals (human needs of food, shelter, freedom, participation, trust) are met, rather than measures of the volume of market economic activity, which is only one means to that end.”
They make reference to an alternative measure, called the Social Progress Indicator, originated by the World Economic Forum and advocated by the Social Progress Imperative and Harvard Business School Professor Michael Porter, which examines how 50 countries perform on 52 indicators related to human needs, and foundations of well-being. The results—Sweden was at the top and the U.S. comes in at sixth.
Excessively focusing on economic indicators such as the GDP and stock market indices takes our attention away from the real measurement of a country’s and people’s progress—our overall well being. We would do well to remember Mahatma Gandhi’s observation about the roots of conflict and violence within a nation are “wealth without work, pleasure without conscience, knowledge without character, commerce without morality, science without humanity, worship without sacrifice, and politics without principle.”