Money matters but it鈥檚 not the only thing that does. Governments need to find better ways of measuring progress.
WHICH country has the highest quality of life: Costa Rica or the US? According to the standard measure of economic development, the US wins hands down: its is more than $45,000 per person, compared to Costa Rica鈥檚 $10,000. Yet looking at the health and happiness of its inhabitants 鈥� arguably more important indicators of well-being 鈥� Costa Rica comes out top.
The idea that more wealth does not necessarily equate with more happiness is nothing new, . Take, for example, a recent study analysing surveys of 350,000 Europeans and Americans between 1975 and 1997. While the GDP per capita increased by 2.1 per cent per year on average, happiness actually fell slightly ().
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That鈥檚 not to say that money plays no role in our well-being; the inhabitants of the poorest nations have the worst health and the lowest life satisfaction. But above a certain threshold, increasing wealth seems to matter less and less to our overall well-being. As a result, focusing on GDP as the prime measure of progress gives only a partial picture of social and personal welfare. A better indicator is needed.
鈥淎bove a certain threshold, increasing wealth seems to matter less and less to our well-being鈥�
The United Nations鈥� Human Development Index is one attempt to provide such an indicator. It takes into account life expectancy and education, two key indicators of overall well-being, as well as GDP per capita. On this measure, Costa Rica (rank 50), the UK (21) and US (15) trail far behind Australia (4).
The Human Development Index, however, does not include any measure of sustainability, a crucial factor if we are concerned about the future, not just the here and now. The solution, according to the New Economics Foundation, is the , which balances a country鈥檚 average life expectancy and life satisfaction against its ecological footprint, in terms of how many hectares each person needs to sustain their lifestyle. It gives an indication of how efficient different countries are at converting natural resources into long, happy lives for their citizens.
Using this measure, , far above the UK (74), Australia (102) and the US (114) in the list of 143 countries. While Costa Rica has a slightly higher life expectancy and life satisfaction than the US, the most dramatic contrast is in the ecological footprint: on average, the footprint of a Costa Rican is just a quarter of the size of an American鈥檚 鈥� a level that is almost sustainable. 鈥淧eople are frightened of giving up their quality of life to save the environment, but this shows that a happy life does not need to cost the Earth,鈥� says Nic Marks, a statistician who helped create the Happy Planet Index.
No one is claiming that this index is flawless, not least because any measure of happiness is always going to be subjective to a degree. But even supposedly objective measures have shortcomings. Great swathes of the economy 鈥� the informal or 鈥渙ff the books鈥� sector 鈥� don鈥檛 even register in a country鈥檚 GDP. Alternative yardsticks like the Happy Planet Index would encourage governments to focus on the social and environmental impacts of their policies, as well as the financial aspects.
Read more: Blueprint for a better world