Five Better Growth Indicators Than GDP

Everyone who knows at least the basics of the economy and how the world works knows what GDP is. As the Gross Domestic Product, GDP measures the value of the economic activity of one country.

Overall, GDP is the specific sum that gathers and measures prices and market values of all services and goods that are produced in an economy during a period of time.

Some would say that GDP is like a real-life-economy speedometer with superpowers.

Therefore, GDP has the power to tell you whether your economy is going slower or faster. Basically, it tells you if you can expect your salary to go up or you should pack your bags and leave the country.

So, GDP is useful. However, it doesn’t have enough information to tell you everything that you should know.

Basically, in GDP was a speedometer in one car, it couldn’t provide all the information. Simply said, GDP can’t tell you everything that you want to know.

For example, it can tell you if you are about to run on oil, or if your cat is about to overheat, however, it can’t tell you how happy your car is, how well-maintained it is, and moreover, how useful it will be to other generation.

Moreover, it can’t tell you just how useful your car is in this society right now.

That’s how GDP runs in human society as well.

It can tell you if you are progressing or you are stepping back.

However, it can’t tell anything about the well-being of the citizens, how happy they are, how healthy they are, or how creative and action-oriented they are.

For a long period GDP worked perfectly until people realized that there is much more to human happiness than a steady economy.

ALTERNATIVES TO GDP

Once global leaders realized that there is much more to human development and progression, one thing and to be changed – how we see GDP. Since GDP can’t tell us everything that we need to know, other methods had to be used.

How this works really… If you are driving a car and you know that you are going the wrong way, but the co-driver knows that and still insist that you go faster, that would be beyond the borders of logic, right?

In this case, your co-driver should you point to the right road, no?

This is what happens when someone complains about the state of the economy but pushes the growth beyond anything else.

So, is there a specific direction for the economy?

And moreover, Is there an adequate direction for a modern economy?

If you ask people around you what’s their vision for a good economy, they would probably tell you that a good economy is that the economy only that enables them to live normally.

By normal economy, they mean an economy that meets their basic needs. Furthermore, it means that people are happy with their life and healthy in their life.

This also means that they want to live in a bubble that keeps them protected from potential long-term trouble and keeps the environment healthy and lower inequality as much as possible.

So, with this in mind, it comes as no surprise that GDP – Gross Domestic Product, measures are not enough to measure real growth. At the moment, the best-ranked countries based on GDP are:

1st place: United States

2nd place: China

While the last place goes to Tuvalu. In general, nothing wouldn’t be unusual here, if we didn’t’ know that America has the highest percentage of obese people in the world, and one of the most anxious populations in the world.

On the other hand, when it comes to China it’s known that its citizens are struggling with finding good jobs, where they will be treated humanely and be paid well.

Simply said, modern times are showing us that there is a far better indicator than GDP. These alternatives are yet to strictly defined and implemented.

However, they are being tested, developed and discussed.

What’s most important is the fact that these GDP alternatives are being used. Can you know how something works unless you use it?

The same philosophy applies here. If you want to know how good GDP alternatives are, you must test them and see their results.

So to understand better where the world is now and how fast it progresses, you should understand your country’s economy better.

The time has come when the GDP is not enough to show proper progress.

In a way, GPD is today known as a poor measure of human progress. The poor measure doesn’t mean that measures are not good or that they shouldn’t’ exist.

No, it simply means that quality should be adjusted and modernization of measures should be conducted. Therefore, GDP alternatives were born.

Now, people can understand human potential and above anything else – human progress, and measure it through other methods, that regular numbers.

Even the World Economic Forum claims that economic growth is mandatory and much desirable in a fast-changing world, but we cannot continue measuring it by exclusively using GDP.

That being said, let’s see what are the top five better growth indicators than GDP.

In far 2015, The New Economics Foundation (NEF), took a stand by proposing the very fresh and rather different five indicators for progress.

This report showed that not everything’s about one metric, but about the bigger picture.

At glance, these indicators are indeed showing how trigged the regular GDP system is.

So, what are the proposed indicators and what are their pros and cons?

Let’s dive into this new area of human progress.

BETTER LIFE INDEX

The globally known the Better Life Index was designed and further cultivated by the Organization for Economic Cooperation and Development or shortly named OECD.

This relevant  Organization was created in now distance 1961 with one goal on mind – to help governments shape better policies. With better policies, public bodies can enhance people’s lives.

During their work and various studies the OECD pinpoint 11 traits that are crucial to wellbeing: housing, income, jobs, community, education, environment, civic engagement, health, life satisfaction, safety, and work-life balance.

These points are mandatory if someone wants to create, achieve, and maintain the Better Life Index. Originally, the Better Life Index was introduced to the world in, now far, June 2014. Ever since it has been collecting various data.

The huge part of better life index is the job, or the good jobs, according to some. Good jobs are important if we want for one country to grow. How good jobs in one country are, can be demonstrated thanks to employment statistics.

These statistics can be specially designed to demonist the proportion of people who have jobs. Moreover, they can’t show us the exact proportion of those who are paid more or less but can give us an overall image.

The very important thing to note here is that a good job can be any job, from top management to cleaning streets, if certain parameters are satisfied, naturally.

We are living in a world where you have to work and to receive a salary, otherwise, you can’t live in modern society.

However, doing any job by any conditions is not the same as having a good job.

First of all, the good job means that benefits are included, that the job is safe, that you are guaranteed a pension, and that you have an opportunity at work to learn, engage with other people, and communicate properly.

Moreover, good job enables you to experience teamwork, leadership, and to be a team leader. Naturally, good jobs should be paid well and provide more than a decent standard of living.

When you have a good job you don’t have to worry if you will be able to work next month, or if you will have work next month.

According to NEF calculations only around 60% of employees are feeling secured regarding their job.

So, back to the Better Life Index… The Better Life Index is lacking on one element only, but yet crucial one – ranking.

It’s extremely challenging to create an appropriate assessment or ranking when it comes to the Better Life Index. The idea behind the site is simple: it enables users to move freely and explore various data.

Moreover, users can explore how their personal preferences are distributed globally. This way a unique way is created, that allows creating the space to giving space own opinions based on specific data.

This is a unique and free way to explore how identical values are distributed globally. You can explore how the same values are seen globally and how others feel about them, and moreover, you can discover how they are measured here.

The Better Life Index is indeed hopeful, detailed, and even a complete alternative to traditional GDP. Just, it’s important to under how this Index works, because it can be hard to sum raw data.

According to too the Better Life Index and its ranking, the first and ultimate place are reserved for Finland, Denmark, and Norway.

South Africa is listed as the last one, while the United Kingdom is 18th, and the States are 15th. Interestingly, there is no data for China. This will be explained further on.

GROSS NATIONAL HAPPINESS

Gross National Happiness or short GNH is a certain philosophy that can be used to reach better human potential. Moreover, this philosophy enables people to use happiness as an indicator of a nation.

For example, in 2008 the king of Bhutan shared with the global leaders how he and his government won’t be using GDP anymore as an indicator of success.

Actually, Gross National Happiness was included in the Constitution of Bhutan, far 18 July 2008.

Although this year Bhutan made the headlines because of their radical move, the truth is that their need for happiness dates in the ’70s of the 20th century.

In far 1972, the ruler of Bhutan, King Jigme Singye Wangchuck, declared that he would no longer focus on GDP nor, he will focus on growth through these indicators.

Rather, he shared, his country will have a new indicator and they will focus on maintaining and building their Gross National Happiness (GNH).

As mentioned earlier, Gross National Happiness is a way of philosophy and the nation of Bhutan shows it.

King was determined to use vigilant standards and guidance given by Buddha to a rather unique approach that will be based on spirituality.

Moreover, he hoped to create a holistic foundation that will eventually reflect the country’s needs.

So, the famous king decided to move his focus from money to spirituality. As a result, the Gross National Happiness (GNH), takes 8 different traits into attention:

1. certain standards that define good living
2. overall health
3. authentic governance
4. ecological variety
5. time consumption
6. flexibility
7. cultural diversity
8. community spirit

Still, to know if these principles are good or not, some governments had to ask people how they feel. Therefore, the government had organized interviews with an exact random selection of 8,000 households.

They asked them about everyday flow and in-depth questions.

Naturally, there were pros and cons. The most interesting fact about GNH is that this approach was the very first alternative to GDP and the first one to measured.

Moreover, this was the very first alternative that was ready to measure its success and share its data with the public. The questionnaire had exactly 148 inquires.

Interestingly, inquires were so various that included how many TV channels they have and if they are satisfied with them, all the way to asking how wild animals affected their routines, and everyday lives, next to everyday obligations.

On the other hand, the biggest cons of these questioners were actually time. It took almost three hours for just one household to fill in their questionnaire.

Furthermore, many would say that Bhutan needs to change its objectives, because, according to many, they are too focused on spirituality, meditation, and mental well-being. In that manner, some of the questions were like often do they pray and do they meditate.

This interesting and now globally popular GDP alternative is so unique that there is no other country to compare Bhutan with it, and according to people from Bhutan, they are happy and just recently they were officially voted the happiest state in the world.

THRIVING PLACES INDEX

Thriving Places Index or TPI was build to help politicians.

Although this might sound a bit rough the truth is that TPI was created by the famous charity founded in the United Kingdom, named Happy City to show local positions as well as local organizers just how their nation lives, and what’s the level of their welfare.

This index was initially created in 2016 and at the time it was distributed in nine cities. At the beginning of 2019, the TPI Index created various scores for both Welsh and English councils.

The exact number of councils included was 351 on the English side, and 22 on the Welsh side. This Index was specifically designed to demonstrate people’s life in exactly three areas that included equality, much talked about sustainability and local conditions.

However, this was the whole idea. No, the initial idea was to shape three main categories (sustainability, equality, and local conditions) and split them into 60 different indicators.

Moreover, the TPI Index focused on only answering three different questions:

1. Is the place fair and equal?
2. Is the place sustainable?
3. Can everyone do well based on existing conditions?

After this massive program, Happy City decided to organize another program, named Happiness Pulse.

The idea behind the Happiness Pulse was to create and demonstrate a micro index for teams, different organizations, and various communities. In general, it was a form of TPI specially designed for various businesses and workplaces.

TPI Index comes with a strong focus on the local community. This way, it was easy to see just how transforming the economy can shape and above all even shape local communities. One of the best parts of the TPI Index was its distribution.

Because of its local focus, it was easy to share this Index across the globe and collect more data. This was fair faster than the Happiness Index in Bhutan.

HAPPY PLANET INDEX

The Happy Planet Index is all about wellbeing. The economy can help people or completely confuse them until they lose their direction and miss seeing its purpose in their world.

However, originally one of the global economic goals was to help people to be better and feel better. People’s lives can be improved if their wellbeing is being treated right.

So, Happy Planet Index seeks to address wellbeing to the measure in a new way.

That being said, Happy Planet Index measures factors such as wellbeing and even ecological footprint. Next to these factors, HPI measures also the inequality and life expectancy of a country.

With these four pillars, HPI hopes to get a conclusion about the entire state in the state.

As you probably know already, the global leader U.N. has various data on different aspects of humans habits, conditions, and life globally, making their open data relevant and up to date.

To get high-quality results, Index used a specific equation where life expectancy and wellbeing are divided by ecological footprint.

According to gathered information, the Happy Planet Index can effortlessly measure numerous factors and apply its method to numerous countries. This Index is bendable, easy to scale, and even easy to measure under different circumstances, above anything else.

Furthermore, the carbon footprint plays a huge role here. The happiness and health of the people can be compared with the carbon footprint, and it makes a huge difference in how people see the quality of life.

This way it’s easy to understand just how significant is the environment in one state. Although this index comes with numerous benefits, it has its own limitations. It turns out that four factors are not enough.

According to HPI, Costa Rica does the best, while Chad is the last on the list. Furthermore, the United Kingdom is 34th, while China is 72nd. Next, the United States is 108th.

HUMAN DEVELOPMENT INDEX

Human development is a unique science that tries to understand how people evolve.

There are numerous definitions of human development, but the mutual idea is that – human development is a unique process of improving human wellbeing, and enlarging people’s opportunities and freedoms.

So, human development is about the real freedom that ordinary people can achieve.

This concept was developed by Mahbub ul Haq, and the United Nations recognized its worth and impact.

So, HDI was created to center on opportunities and not economic growth.

Furthermore, the U.N. supports nations worldwide to adopt HDI.

However, the U.N. empowers country’s to use HDI next to their gross national income data.

Looking at HDI, some features are easy to spot, like how wealth, next to money, and various opportunities can be the channel to the people.

Per capita income (PCI) is a strong tool, but in combo with HDI, it can become a powerful combination.

Moreover, the HDI has the power to explore the important area of schooling. Moreover, HDI can analyze the actual length of schooling and the real need for schooling.

This way, every nation can understand better what falls from their beliefs and can try to overcome any potential obstacle and learn what specific steps should be done about it.

So, next to life expectancy, various aspects enable HDI to demonstrate what type of opportunity, or lack of it looks in every country.

So far, no one could deny that HDI offers a huge number of benefits. However, HDI is still missing on specific factors, including safety and environmental damage. Next to it, HDI is missing on inequality and empowerment.

According to this Index Norway is doing the best, while the last one place goes to Niger. When it comes to Asian leader China it takes 86th place, while the United Kingdom is 14th and the States 13th.

GREEN GROSS DOMESTIC PRODUCT

Green Gross Domestic Product is opposite to conventional GDP. This new index is named the Green GDP. Opposite to conventional GDP, this new and green Index is focused on the environment and its damage factors.

By focusing on this area, this non- conventional GDP has one goal – to demonstrate the country’s where they stand when it comes to the environment and how they can have better living standards by understanding their role within the environment.

The now-famous green GDP was passionately developed by one of the Asian leaders – the Chinese government. The idea behind this Index was to figure out where exactly China stands when it comes to the environment.

The main reason for this was the concern for the people because of the massive carbon emissions in China. The Chinese government wanted to learn what are exactly the carbon consequences.

Moreover, they wanted to see just how much climate change affected them. Overall, the famous Green GDP is a game-changer and highly honest attempt to understand how climate change is transforming the world.

Naturally, some data can turn the hardest climate change, non-believers, into believers. However, the biggest downside of the famous Green GDP is the fact that putting a price on biodiversity can be difficult, if not impossible.

Moreover, it is questionable how accurate this model is. Truth be told, CO2 emissions are easy to measure, but it’s hard – if not impossible, to put a price on it.

At the moment, the Green GDP is basic, and it’s still challenging to approach the full data and fully understand it.

At the moment, this test (you can call it even the GDP experiment) is totally on China and the time will show effective or not it really is.

THE BOTTOM LINE

GDP is a traditional indicator that shows people how well, or not, the standard of living is.

However, the practice has shown the experts, politicians, and the global leaders that this indicator is known if rough and inconvenient to measure every aspect of living.

This indicator wasn’t created to measure levels of environmental quality, levels of education and health, levels of leisure and so on. Therefore, GDP was designed to show how well the economy is developed or not.

However, the standard of living goes beyond the economy. There are various elements that can define people’s happiness and different elements that can improve someone’s life or not.

Therefore, alternatives to GDP were born. Some of them are still in the testing phase, while others offer concrete and functional data.

Naturally, as everything new, these alternatives are limited in a way and are yet to be tested to show just how significant they are. So, what can a person do until the ultimate, and new GDP is created?

The one thing that anyone can do – be self-educated and educate others. In the meantime, it’s crucial to follow the changes on the global scene, follow different researches and Overall, any GDP should show the standard of living.