Money Is The Key To Happiness

However, per capita GDP, not GDP itself, is the real measure of national progress

- Ruchir Sharma

Leading progressives in the US Congress recently joined a growing list of world leaders pushing to supplement GDP with a broader measure of human progress, an idea conservatives lampoon as “squishy indeed”. But this movement dates to Simon Kuznets, the Nobel laureate who invented the precursor to GDP to quantify US losses during the Great Depression.

Even Kuznets pushed for a higher standard, saying this crude tally of stuff bought and sold did not reflect a society’s well-being. In 1968 US Senator Robert Kennedy said gross output measures everything “except that which makes life worthwhile”, including the health, education, and welfare of children.

Researchers have since proposed alternatives from Gross National Happiness to the Well-Being Index, the Malaysian Fuzzy Quality of Life Index, and India’s Green GDP. The US legislators are promoting GPI, the Genuine Progress Indicator, now the most serious contender alongside BLI, the Better Life Index endorsed by the Organisation for Economic Co-operation and Development.

All aim to modify or replace GDP with social or environmental factors, or both but disagree on the factors. It may be decades before the world settles on a new standard. As experts debate, a sense that rising prosperity is not lifting most of mankind is spreading. But an interim fix is at hand: Replace GDP with per capita GDP as the main target of policymakers and the key measure of progress.