An economy for people, not vice-versa

Posted: February 14, 2012 in Economic Development, Statistics
Tags: , , , , ,

Imagine a world where leaders worried foremost not about GDP figures, inflation and interest rates, but rather about actual wellbeing: that citizens live healthy, fulfilled lives. Imagine if we had a means of measuring that instead. It’s too easy, unfortunately, to be prosperous and still miserable.

Opinions on this diverge pretty widely:

  • Some argue that, once you reach an income that can meet your basic needs (say $50,000) more money isn’t going to make you much happier.
  • Others point to studies that show that happiness will increase with increased income but the law of diminishing returns applies: a $20,000 pay increase increases the happiness of a person earning $250,000 a lot less than it does a person earning $50,000 per year.
  • Finally, there have been studies warning that obsession with material progress will actually come at the cost of happiness and wellbeing.

It looks like the third view is having its moment. France, Canada and the UK have all announced that they will start measuring national wellbeing by means other than GDP. A vision of the future, I wonder?

The United Nations has long used a rough quality of life index called the Human Development Index though it gets nothing like the attention that Gross Domestic Product does. There are also niche providers of organisation-level Quality of Life surveys, such as UK-based (QoWL). Melcrum Consulting publishes another. (Interestingly, the countries and cities consistently at the top of these rankings are always Scandanavian, Australasian and Swiss.)

Two observations:

  1. A quality of life index provides a more meaningful insight into the degree to which people in developing nations are not living the life they would like to. I am suspicious of dollar comparisons since they do not take account of difference in purchasing power parity or (more to the point) different expectations of what constitutes the good life.
  2. These issues are interconnected. People in the developed world stockpile needless commodities in their efforts to keep up with the Joneses. This produces the demand to make ever more commodities, sucking more and more people into the low-cost manufacturing sector. I often think of the statistic that China manufactures 95 billion ballpoint pens a year – one a month for every man, woman a child on the planet. Is that ridiculous enough yet? Maybe our priorities do need realigning.

Vested interests push the ‘spend, spend, spend’ message so tenaciously that political leaders tend to assume it’s just normal. It’s pretty courageous of the governments mentioned above to have taken this step.

Below: Infographic of a Quality of Life survey specific to Europe

uSwitch Quality of Life infographic

Further reading:

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  1. Company is never so healthy as when, being a chicken, it should execute a specific amount of scratching around for the purpose it gets.
    If you fail to help love but simply with distaste, it is advisable that you can leave work.

  2. […] An economy for people, not vice-versa 14 February 2012 […]

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