Breaking the Constraints of GDP Accounting: The Happy Planet Index

By Jack Hall, courtesy of CSR Malaysia.

In 1947, the development of the United Nations System of National Accounts marked the point in time when nations across the world started to become judged on their Gross Domestic Product (GDP) ahead of all other factors. Since then, the pursuit of growth in the name of an increased GDP (and consequently, national performance) has produced a globally recognised justification for the inefficient utilisation of natural resources, the extensive degradation of the world’s environment and the exploitation of those unfortunate enough to be born into lives destined for the bottom of the value chain.

The arguments for pursuing economic growth at the expense of everything else have been strong for so many years. Without the pursuit of growth it is questionable whether the technological capabilities I am using the produce and publish this article would even exist.

However, corresponding with the ecological stance on growth, it would appear that we have reached an optimum point, subsequently, continuing in its pursuit has a strong potential to see the negative aspects overshadow the positive to an even greater extent than they, arguably, are doing at the moment. The global realisation of this would leave the world seeking an alternative vision to govern societies, such an alternative vision has been presented in the form of the Happy Planet Index.

The Happy Planet Index is an innovative construction that looks to assess the attainment of human well being and standard of living of different nations at the same time as monitoring efficiency in use of natural resources. In doing this it is able to monitor society’s development without being constricted to traditional statistics such specifically GDP and GDP per capita. This means that it can offer a new insight into the level of human well being in various nations, an aspect often closely associated with GDP per capita. The hypothesis behind the Happy Planet Index is that the nations at the top are able to achieve long happy lives without stretching the world’s natural resources.

The index uses three specific indicators, Life Expectancy, Life Satisfaction and Ecological Footprint in order to offset the traditional standard of living indicators with environmental impact thus obtaining data about how sustainable the achievement of long and happy lives has been. By offsetting the economic growth, that has been achieved by nations such as the USA, against the environmental sacrifices that have been incurred in its achievement one obtains a more in depth view of the true value of growth and development.

The results make for interesting reading. The poor living conditions in a large number of African countries means that many of its nations have two of their three indicators rated as poor and thus fall into the ‘red’ category, this is to be expected. Only four nations outside of Africa are rated as red two of these, Cambodia and Iraq, have intense political unrest to explain this low rating, however, the remaining two, USA and UAE, demonstrate the how important the Happy Planet Index has the potential to be. These two nations fall 6th and 15th respectively in the International Monetary Fund’s rating of nations by GDP per capital and as a consequence the specific factor that draws focus is the efficiency through which they have achieved their level of GDP.

The Happy Planet Index is a step in the right direction when it comes to creating a focus on sustainable development. By contrasting it to the economic data readily available one can not only attribute the specific causes of problems, but they can also see where the weaknesses in current economic data lies. The Happy Planet Index may never be a replacement data on GDP, however, it certainly questions our reliance on it.

For more, visit the Happy Planet Index at http://www.happyplanetindex.org/