Good, Better and ... Calculating Sustainable Development's Best

Vikrant Labde | Wednesday 3rd February 2010

Sustainable Development is predicated on the idea that a country can do better this year than it did the year before.

The question then, of course, arises how do you define 'better'?

Most people would argue that better would be reduced rates of hunger, reduced rates of infant mortality and preventable death, increased nutrition and so on are signs of well, development.

Then why is it, when we talk about improving a country's well being the conversation often focuses on merely discussing a nation's Gross Domestic Product or GDP?

GDP is the value of all final goods and services made within the borders of a country in a year. It is usually strongly correlated with high rates of economic well being. Put another way, countries with high GDP often also have high rates of consumption.

Yet, as any first year stat's student could tell you correlation does not show causation. There is no evidence to illustrate that a high GDP alone indicates a high quality of well-being throughout a country.

In fact a Google search of problems with GDP would list a plethora of problems including:

It talks about economic activity within a nation but not how that wealth is distributed. The United States, for example, has one of the largest economies in the world but it also has one of the largest gaps between rich and poor. In places like the New York City's East New York neighborhood infant mortality rates are on par with those of children born in a developing nation.

GDP doesn't say anything about human happiness. The truth is that once people have enough money to be reasonably well clothed, sheltered and fed, additional income doesn't actually increase happiness. In the United States even before the economic crisis, despite the fact that GDP was reliably growing, personal dissatisfaction was increasing. It turns out that our never ending tide of new electronic gizmos and flashing whozits have come on the back of community and of peace of mind - we've never felt as disconnected while having so much.

It ignores the value of things that aren't in the market place. The value of the work of stay-at-home moms, dads and grandparents and the work of volunteers don't 'count' in this system. Is it any wonder then that services that we used to do ourselves we find ourselves increasingly farming out to the economic system?

GDP doesn't differentiate between good economic activity (growing food in eco-friendly ways) and bad economic activity (the costs associated with cleaning up a massive oil spill).

It also doesn't take into consideration present increases in GDP that are predicated on resources that are in effect being stolen from our future.

Now don't get me wrong, I don't think GDP is inherently evil. It is just an indicator, but much like the much ballyhooed BMI was never intended to determine the health of an individual, GDP was never intended to determine the health of an economy, or of the people whom that economy is supposed to serve.

So what's the solution?

Well, much as ecosystems value diversity, I think our indicators should also be diverse. We should have one, like GDP that tracks the economic activity within a nation, another that looks at distribution of wealth, one that keeps on hour our ecosystems are doing, and with a nod at our friends in Bhutan an indicator that tracks national happiness.

These are just a few of the indicators that I think should make up the basket of indicators by which we judge the health of a society. What indicators do you think would be helpful?

Other Great Categories

	Vikrant Labde Is blogging
You are now following Vikrant Labde.