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Editorial

Happy Planet Index measures well-being

Curiosity about the Happy Planet Index (HPI) led me into the sometimes murky world of economic indicators, which include the Gross Domestic Product (GDP) and Genuine Progress Indicator (GPI).

The HPI probably should have been given a different name.  The name is too cute, and it encourages giggles, ridicule and general snarkiness by bloggers.

However, it is a genuine effort by the New Economics Foundation, a British think tank, to formulate a “global measure of sustainable well-being.”

The index website, www.happyplanetindex.org, explains that the index measures “the extent to which countries deliver long, happy, sustainable lives for the people that live in them. 

The index uses data on life expectancy, experienced well-being and ecological footprint to calculate this.”

“Experienced well-being,” to oversimplify, is a measure of satisfaction with a variety of factors in everyday life, such as employment, government and community matters.

The data for it is drawn from the Gallup World Poll, a well-regarded instrument.  The numbers for life expectancy are from the United Nations Human Development Report, and the ecological footprint is a measure developed by the World Wildlife Fund.

The formula is: experienced well-being multiplied by life expectancy and the product divided by ecological footprint.

The index does not consider human rights issues in its calculations.  It is not meant to stand alone but to be used with other measures related to economics and the environment.

In the HPI report for 2012, the United States ranks 115th among the 151 countries for which data was available.

The GDP and its close relative Gross National Product (GNP) are the most-reported measures of our economy.  For simplicity, we will use just the GDP. 

GDP doesn’t give us all we need to know about our economy.  It is a measure of the flow of money in our economy.  It is not a measure of personal income or of the economic well-being of our country.

The investorwords.com website describes the GDP as “the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investor and government spending, plus the value of exports, minus the value of imports.”

The GDP was never intended as a measure of well-being, but it has been used as one because it is all we have had.  Also, it is used worldwide, which allows comparisons.

Adding up all the things on which money has been spent does not tell us anything about the quality of our lives.

Lumped in with the production and sale of new housing, large appliances, cars, clothing, computers and all the other stuff of our existence are the costs of cleaning up oil spills, crime, prisons, drug abuse, hurricanes, floods and tornados.

The Genuine Progress Indicator (GPI) was developed in the mid-1990s by the Center for Sustainable Economy and the Institute for Policy Studies as a measure of economic growth and its impact.

It uses the same basic data as the GDP, but it analyzes the results of economic growth to determine whether they benefit people overall.  Because it does use the same data, it has been possible to go back to 1950 to make comparisons.

Additional data that is taken into consideration include the distribution of income and the value of unpaid work such as child care, elder care, household work and volunteer work.  To determine negative impacts on economic growth, it considers the costs of disasters, crime, medical care after accidents, and results of poverty, pollution, resource depletion, long-term environmental damage, the lifespan of consumer durables and public infrastructure.  At genuineprogress.net, 26 specific items are listed.

The GPI increased in the 1950s and 60s, but it has declined about 45 percent since 1970.

It is used to some extent in the United States and Canada, and it has gained worldwide attention.

A healthy economy is one in which the immediate bottom line for the few is not the first consideration.  Yes, manufacturing, buying, selling and creating services are integral. 

Creating living wage jobs and maintaining the health of our workforce, government and environment are also complexly interwoven in our overall economic well-being.

Nancy Minard – contributing editor





Copyright © June 2013 - The Fig Tree