Reply To: Time to replace GDP with metrics of sustainability and well-being

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Richard WilkinsonRichard Wilkinson

I want to raise an issue about a weakness of GPI as a measure of “genuine progress”. Although the divergence between GDP per head and the GPI since the late 1970s tells us something important about the costs of economic growth, the GPI has a serious flaw if we want to maximise sustainable wellbeing. It implies that, but for the negatives it brings with it (from car crashes to pollution), the rest of economic growth would be as beneficial to us now as it ever was.
Although economic development is of course what has transformed the real quality of our lives, the signs are that, in terms of improvements in the really important aspects of human wellbeing, there are rapidly diminishing returns to growth as countries get richer. The curves of both life expectancy and happiness against GDP per head rise rapidly in the early stages of economic development and then begin to level off among middle income countries until, among the richest countries, further growth seems to bring no further benefits in terms of health or happiness.
Life expectancy in the rich countries continues to rise as fast as it has over the last 100 years, so the levelling off is not because we have reached the limits of human life expectancy. It is instead that increases in life expectancy – or happiness – no longer have any relation to growth. The implication is that growth continues to be important in poorer countries where many people still do not have access to basic necessities but, for people in the rich countries, having more and more of everything makes less and less difference. Although we continue to need innovation and change, it looks as if in the rich countries economic growth has largely finished its work of transforming the real quality of life.
The problem with the GPI is that it would be possible to get further increases in the GPI without real improvements in human wellbeing. If the sum of GDP less the ‘bads’ became positive again, showing that we had more stuff even after subtracting the negatives, that would appear to be “genuine progress”. But there is no reason to think it would actually have added anything to human health or happiness in the rich countries.
Of course individuals in rich countries all want more money to buy more stuff, but that is primarily about how we use consumption to serve status competition. And of course, at the societal level, individual status competition is a zero sum game. (And actually, if we look at psychological studies of individuals most into consumerism, status competition is considerably worse than a zero sum game!)