Some two to three years ago, my friend Newlands Greenidge loaned me a book entitled The Economics of Happiness: Building Genuine Wealth and expressed the desire that having read it, I should write an appropriate article. I read the book but was rather tardy with the requested article.
In the Sunday Sun of February, 2, Mr Ralph Jemmott, in an article headlined Social Wellness poses some relevant questions/observations in his usually eloquent and provocative style. I believe that the answer to the question as to “whether progress and development should be measured solely or primarily in relation to GDP” is an unequivocal no.
It is my understanding that the data comprising GDP makes no qualitative distinction between “good” and “bad” expenditure and does not consider the value of things such as leisure, our environment or the quality of our education and health systems. In addition, GDP is silent as to whether wealth is being distributed in an equitable manner and consequently makes no comment on the negative impact on our living standards posed by the ever increasing gap between rich and poor. In short GDP by itself tells us little of the absolute level of our “well-being “or the trend in our “social wellness”.
In the context of the shortcomings of GDP to define a nation’s well-being, and in spite of the difficulty of developing a meaningful index, some countries are focusing more on “quality of life” measurements than on purely economic ones. Countries like Canada, United States, Bhutan, Malaysia and China (to name a few) have been developing indices which would indicate the nature and level of their “wellness”, “well-being” or “genuine wealth”. The United Nations, too, has developed its Human Development Reports which include its Human Development Index and Human Poverty Index.
Canada, for example, has The Canadian Index of Well-being (CIW), which is a composite index measuring those things beyond the economy that matter to Canadians. The index comprises eight domains – community vitality, democratic engagement, education, environment, healthy populations, leisure and culture, living standards and time use.
In turn, each domain has eight sub parts so that in essence data is accumulated and tracked in 64 separate headline indicators. The 2012 report of the CIW advisory board indicated that from 1994 to 2010, while Canada’s GDP grew by 28.9 per cent, improvement in Canadian well-being grew by 5.7 per cent thus confirming that robust economic growth will not necessarily translate to similar gains in the overall quality of life.
What is even more startling is that the 8.3 per cent drop in Canada’s GDP following the 2008 recession was accompanied by a stunning 24 per cent decline in Canada’s CIW. These findings about the connection between well-being and the economy should surely arouse the curiosity of any thinking Barbadian especially in these times of continuing negative GDP.
Sometime ago, the news that Barbados had scored well in the United Nations Human Development Index and in the world body’s Human Poverty Index filled us with a sense of pride, and rightly so, as it provided some independent evidence that all post-Independence administrations in Barbados must have viewed “growth” as a means to an end rather than as an end in itself. Consequently they placed great emphasis on matters pertaining to health, education and various progressive labour legislation and regulations, inter alia.
This leads me to question whether we have, or are in the process of developing an index which would enable us to measure and assess periodically the level of well-being of our citizenry. For surely this is the type of information that should inform government policy as it seeks to respond to the needs and values of its citizens. Any perceived difficulty in first defining and then measuring well-being should be no excuse as there are enough models on the international scene to guide our local economists and planners.
Another question which Mr Jemmott poses is whether it is realistic to assume that a country like Barbados will continue to achieve ever rising levels of GDP. This question calls to mind the observation of one social/economic commentator that there is need to design an economic system that survives not only on zero growth but on negative growth. In addition as we set our goals for growth we need to stipulate growth of what and for what.
Take our tourist industry, for example. There must be some optimum number of visitors we can accommodate beyond which, initially, diminishing returns and, eventually, negative returns (especially in terms of our environment) will be the result. Does anyone have any idea what this optimum number is and how it impacts our goals?
The above comments are in no way meant to trivialise the importance of quantitative information as it relates to growth of GDP, increases in foreign exchange reserves and reduction in unemployment. I assume that we pursue these goals not as ends in themselves but as a means to achieving the ultimate goals of improvement in health care, meaningful education, housing, leisure and the environment all of which are part of the ingredients which comprise the “public good”.
The aim of my comments is to initiate some discussion as to the desirability of developing an index which would measure our well-being thereby not only informing us as to the quality of our lives but more importantly influencing and directing official policy. Maybe then we would shift our collective economic and social mindset from one of “more and more” to one of sufficiency, moderation and “enough”.
Ken Hewitt is a retired business executive.
