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Measuring what matters: new index

Measuring what matters: new index

Starting from the fact that fulfilling lives cannot be achieved through industrial output alone, we need therefore to break the production-consumption cycle that affects the natural and social equilibrium. If on one side, as explained earlier, it is important to act on our daily life style and on a new definition of the role of humans in the next system, on the other side it urges to measure differently our economic success.

Our current hungry development is reinforced by the predominant measurement which is gross domestic product (GPD), that consider just the “priceable” output. The GDP considers only the monetary transaction of the total spending by households, governments and investments across the nation, ignoring all the non-monetized activities. Sending a child to a day-care center rises the GDP, while caring at home by member of family does not; a forest cut down and turned into pulp adds to GDP, but a standing forest does not. In fact, one main problem of basing our economy on an index such as the GDP, is for example that natural wealth has no value unless owned and exploited, by consequence environmental destruction is not deducted from the GDP measurement. Also cancer, crime, car accidents and divorces lead to rising GDP. Hence, if your country is not growing as fast as expected, think about one of these activities, such as divorcing, it can be your good action in order to increase the GDP!

In addition to the above, this index does not count all the full social and ecological costs, and does not integrate information about the distribution of good and services. By consequence, the GDP results an inadequate index of the societal well-being, but our decision makers still use it as proof of (economic) success.

It urges to reframe the new economic system and to measure our activities with index that go beyond the narrow definition of economic growth. My interests are more and more focused on the need of new performance assessment indicators that promote quality over economic quantity and that are capable of integrating the key dimensions of human and ecological well-being, measuring what “really matters”. Considering the monetary and non-monetary measurements, we could measure our economic success integrating the natural and social capital and being aware of the limits that cannot be exceeded without affecting our prosperity. A well-being economy takes into account the positive and negative externalities and genuine progress indicators are becoming more and more explored. In this directions the United Nations developed the Inclusive Wealth Index, a beyond GDP tools. Index of Social Health, Ecological Footprint, Happy Planet Index, Gross National Happiness are all index that tries to integrate the social and ecological health, such as the level of inequality, suicide, species loss and GHG emissions.

In the light of the new parameters substantial research and work should be done to introduce them to the political debate and to implement them.

Rethinking the economic system is challenging because it will trigger profound changes politically and socially. However, pockets of experimentation are mushrooming around the globe.  Actions and events, such as the New Economy Conference (2017) that we are organizing in Brisbane, enact the revolutionary changes necessary to create a sustainable, prosperous and more equitable future.

[1] Morgan Clendaniel, https://www.fastcompany.com/3068902/the-world-changing-ideas-of-2017

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