Why We Need New Measures of Wellbeing

by Ronald Colman
Director, GPI Atlantic and Reality Check Editor-in-Chief

Indicators are powerful. What we count and measure reflects our values as a society and literally determines what makes it onto the policy agenda of governments. As we enter the new millennium, these indicators tell us whether we are making progress, whether we are leaving the world a better place for our children and what we need to change.

But we currently measure our progress and gauge our wellbeing and prosperity according to a completely materialist set of indicators -- our economic growth rates. Small changes in the gross domestic product (GDP) and related market statistics send an adrenaline rush down the veins of policy makers.

Counting it all Wrong

But these measures send inaccurate and even dangerous signals to policy makers. The more trees we cut down and the quicker we do so, the faster the economy will grow. The more fish we sell, the more fossil fuels we burn, the more rapidly we deplete our natural resources, the faster the economy will grow. So long as we measure "progress" like this, we will not translate pious homilies about "natural resource conservation" into action. In fact, counting the depletion of natural capital assets as gain is simply bad accounting, like a factory owner selling off his machinery and counting it as profit.

Our growth rates also make no distinction between economic activity that creates benefit and that which causes harm. So long as money is being spent, the economy will grow. Crime, pollution, accidents, sickness, and natural disasters all make the economy grow, simply because money is being spent on prisons, lawyers, doctors, drugs, hospitals, and pollution cleanup. Indeed, the Exxon Valdez contributed far more to Alaska GDP by spilling its oil than if it had delivered its oil safely to port.

While our economic growth measures count many harmful things as "progress", they completely ignore genuine contributions to wellbeing, like voluntary work, simply because money is not exchanged. If we care for our own children, it has no value in our current measures of progress.

The economy can also grow even while inequality and poverty increase. It grows if we work longer hours: free time has no value in measures of progress based on the GDP. The economy even grows if we produce shoddy goods that have to be replaced more often: and it grows if we produce more waste.

In sum, economic growth rates are an inadequate, misleading and even dangerous measure of wellbeing and prosperity. The architects of the GDP never intended it to be misused as a measure of societal wellbeing, as it is today. Simon Kuznets, Nobel prize winner, wrote:

The welfare of a nation can sarcely be inferred from a measurement of national income ... Distinctions must be kept in mind between quantity and quality of growth ... Goals for 'more' growth should specify of what and for what."

And scientists warn that the only biological organism that shares our current economic dogma that 'more' is 'better' is the cancer cell. Nature, by contrast, thrives on balance and equilibrium, and understands limits to growth.


Better Ways to Measure Progress

Fortunately, there are better ways to measure wellbeing and progress, ways that assess the health of our natural environment, our communities and our people, and the purpose of this new Review it to tell you about them. These new measures assign explicit value to environmental quality, population health, livelihood security, equity, free time and educational attainment. They count unpaid voluntary and house hold work as well as paid work, and they count sickness, crime, pollution and greenhouse gas emissions as costs not gains to the economy. Unlike the GDP, 'less' is sometimes 'better' in these new measures of progress.

This first issue of Reality Check surveys some of the important work going on throughout Canada to create new and innovative indicators, and measure our wellbeing more accurately. By reporting the results of these efforts, Reality Check will provide Canadians with far better and more comprehensive information on how we are really doing as a country than is currently available. And through this reporting, Reality Check aims to assist the policy-making process to consider Canadians' social, human and environmental concerns as well as purely materialist ones. The long-term goal is to have a Canadian Index of Wellbeing that is valid, reliable and reflective of Canadian values.

Reality Check is dedicated to ensuring that these new measures of progress get the same attention that leaders, economists, experts and journalists currently devote to tracking whether our economy is booming or shrinking. And Reality Check will prod our leaders to put the same energy into promoting social progress and preventing environmental decline as they currently put into promoting economic growth and preventing recession.

Only by counting and measuring what really matters to Canadians can we ensure that we will leave a better Canada for our children.

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Last Update: May 15, 2001
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