When it comes to development, is GDP the only thing that matters? The Organization for Economic Co-Operation and Development (OECD) says no. The OECD released a new report that looks at a variety of statistics with the hope of finding new measures for assessing well-being that go beyond Gross Domestic Product. The authors of the report believe that in this day and age statistics like GDP are not enough for policy-makers to go on, but that we need to look at the broader picture beyond level of income, such as how to improve citizens’ well being, ensure access to opportunities, and preserve our social and natural environment.
What they found was rather interesting. The report looked at 11 aspects of life, including income, jobs, housing, health, education, and the environment, and found that while income is important, many of the other factors mattered more. (For a full list of the factors and to play around with an interactive chart, visit the OECD Better Life Initiative website) The report also found that well-being has generally increased over the last 15 years, with more people getting an education, getting jobs, getting richer, living longer, and living in better houses—though this improvement has not occurred evenly. There are still large differences among countries and among citizens, and less educated and low-income people tend to do worse in all of the aspects.
However, people in the richest countries are not necessarily the happiest. This is because, as the report found, money alone does not create happiness. The happiest populations were the ones who had high levels of social contact, trust in others, and personal safety. The report also found that, contrary to popular belief, income inequality is not one of the factors that seems to have a strong relationship with unhappiness. While the unhappiest Dane is jollier than the unhappiest Chinese, the unhappiest Brazilian, Mexican, and South African was also happier than the unhappiest Chinese, and all of those countries have higher gini coefficients (a measure of income inequality with 1 being perfect inequality and 0 being perfect equality) than China. Similarly, the happiest Dutchman was not as cheerful as the happiest Brazilian, even though Brazil’s gini coefficient is almost double that of the Netherlands.
So let’s put all this information together. What does it mean for economic development and growth in less developed countries? To put it simply, it shows that economics are not the only measure of growth. Income and GDP are not all that people are worried about, but it is what policy makers seem to focus on the most. After all, it’s a lot easier to try to help a country grow economically or to reduce income inequalities than it is to try to build social contact or trust, even if those are the things that this study found mattered more. Still, it does shed some insight into what kind of things are most important to people, and it encourages policy makers to focus on levels of happiness as well as more objective statistics like GDP. This is not to say that GDP and economic growth is not important, but simply that it shouldn’t be the only factor considered when it comes to development. A well-rounded approach is necessary, one that includes measures of well-being as well as well as measures of income. So what do you think? Is that an achievable goal, or should development policy continue to focus on GDP and income, which are easier to build than social factors?
Michelle Bovée is a SISGI Group Program and Research Intern focused on international affairs, economic development, and responsible tourism. To learn more about the SISGI Group visit www.sisgigroup.org