Wellbeing can be measured in many ways

Wellbeing can be measured in many ways

September 23, 2016

Wellbeing can be measured in many ways

In recent years, the use of gross domestic product as a way of measuring a society’s wellbeing has been consistently challenged from observers around the world. This extract, taken from the latest volume of Eating Planet, introduces the concept of wellbeing indicators - an area where BCFN is carrying out a great deal of research and promotion.

Over the last few decades, both in the west and in emerging countries, an increasingly strong trend has developed suggesting that there is a significant divergence between macroeconomic indicators and the wellbeing felt by citizens: in other words, it appears that economic growth alone is not always able to guarantee improved levels of overall social wellbeing.
This occurs not just because there are costs associated with growth which, although difficult to quantify, have a significant impact on people’s lives (such as the excessive exploitation of environmental resources or the long list of negative effects linked to economic activity), but also because economic indicators measuring growth, by their very nature, overlook social and environmental factors which are fundamental for wellbeing.
The emergence of greater awareness of this issue over recent years has led to a lively debate on the effectiveness of the indicators used by states up to this point to make large economic and political decisions. Gross domestic product (GDP) is the main focus of attention in this debate.

What GDP is missing
GDP is the main indicator for measuring a country’s economic activity. It is considered that its growth over time represents an economic system’s ability to generate wealth and thus the economic wellbeing of its citizens.
However, this indicator has come to be seen as a fundamental gauge for socioeconomic development as a whole, and yet, in reality, this is a role which it is unable to fulfil. Indeed, it needs to be combined with a wide range of measures which assess the factors affecting citizens’ living conditions, such as social inclusion, inequality and the state of the environment.
This view was put forward by Robert Kennedy back in 1968 in a famous speech made at Kansas University, which argued: “We will find neither national purpose nor personal satisfaction in a mere continuation of economic progress, in an endless amassing of material goods. We cannot measure national spirit by the Dow Jones Average, nor national achievement by the Gross National Product. For the Gross National Product includes air pollution, and ambulances to clear our highways from carnage […] It grows with the production of napalm, missiles and nuclear warheads…it also includes research to improve the dissemination of the bubonic plague, increases with the equipment that the police used to quell riots and continues to rise when slums are rebuilt from the ashes of destruction. It does not count the health of our families, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our family values, the intelligence of our public debate or the integrity of our public officials. It does not measure the justice of our courtrooms nor the equality in our relationships with one another […] It can tell us everything about America, but not whether we can be proud to be Americans”.
Already back in 1934, the creator of GDP, the economist Simon Kuznets, explained to the US congress that wellbeing and GDP are two very different things: “The wellbeing of a nation (...) cannot be easily discerned using an index of its national income”.

How to measure wellbeing
The point which emerges the most clearly from this debate, on various scientific and political levels, is that wellbeing cannot be characterised according to a single measurement. However comprehensive, a detailed list of the possible factors which influence individual wellbeing is bound to be incomplete. Nevertheless, it is worth expanding as much as possible the number of factors used to create statistically and methodologically rigorous indicators.
With this in mind, various multidimensional descriptive indicators have developed over time in order to measure wellbeing and quality of life in a given country, region, city or area. For instance, these include indicators of education, training and employment, environmental indicators, indicators measuring energy, health, human rights, disposable income, infrastructure, public and private safety, and recreational and cultural activities, among others.
The first attempt on a global scale to measure wellbeing in a country, taking these aspects into account, came in 1990 with the United Nations’ Human Development Index (HDI), but it is only in the last ten years that efforts have really been focused on this issue. In 2007, the European Commission, the European Parliament, the Club of Rome, the WWF and the OECD organised a conference called “Beyond GDP” and in 2008, a commission made up of around 30 globally-renowned economists was established, chaired by Nobel prize-winners Joseph Stiglitz and Amartya Sen and coordinated by French economist Jean-Paul Fitoussi – tasked by the then French President, Nicolas Sarkozy, to study and propose alternative measures of wellbeing. The work of the Commission on the Measurement of Economic Performance and Social Progress was published in September 2009 and was a necessary step for those who went on to develop new indicators of wellbeing.
The process initiated by France was copied by various countries around the world (the first were Germany, UK, USA, Australia, Ireland, Mexico, Switzerland and the Netherlands). For instance, in the UK, the former Prime Minister, David Cameron, charged the UK Office for National Statistics with the task of identifying new measurements to be used to evaluate economic policies.
In Italy, the two institutions traditionally responsible for measuring the country’s economic data, Istat (the National Institute of Statistics), and Cnel (the National Council of Economics and Labour), parliament’s advisory body for economic issues, established a Steering Group to measure progress in Italian society, with representation for social partners and civil society. This group presented its first report in 2013 on the health of the country’s citizens, including indicators of social wellbeing, which is updated and extended every year

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