OECD Better Life Index Dissatisfaction with GDP as a measure of economic development was not limited to developing economies . The developed world also believed that this measure did not provide a sufficiently detailed picture of the living conditions that ordinary people experienced . While these concerns were already evident during the years of strong growth and good economic performance that characterised earlier decade , the financial and economic crisis in 2008 further amplified them . Increasingly , calls were made to consider a broader picture of human development to improve the development and accountability of public policies .
Figure 3 . Measuring Well Being
In 2007 , the French government instigated a process for improving the measurement of economic well-being . The Commission on the Measurement of Economic Performance and Social Progress completed its report in 2009 ( Stiglitz , J , Sen , A & Fitoussi , J-P , 2010 ) providing a recommended template on how to measure economic performance and social progress . Applying this template as a starting basis , the OECD subsequently developed a Better Life index which could assess progress looking not only at the functioning of the economic system but also at the diverse experiences and living conditions of people . The Index is built around three distinct components : current well-being , inequalities in well-being outcomes , and resources for future wellbeing ( Figure 3 ).
Genuine Progress Index As opposed to the HDI or Better Life Index , the development of the Genuine Progress Index ( GPI ) was not a government mandated process but has been led by the academic community . One of the problems pointed out in the economic literature is that GDP conflates costs and benefits , leaving out many benefits from non-market economic activities , without accounting for inequality . The GPI , and its predecessor , the Index of Sustainable Welfare ( ISEW ), were developed as alternative indicators of national progress . In addition to measuring economic progress , these alternative indicators also factor-in social and environmental dimensions and can therefore be used as proxies for wellbeing in monetary units comparable with GDP . The GPI is a composite indicator , consisting of several indices , grouped over economic , social , and environmental
Source : OECD https :// www . oecd . org / wise / measuring-well-being-and-progress . htm
categories , to form a single metric ( Hoskins & Mascherini , 2009 ). The benefits and disadvantages of composite indicators and the use of GPI as a method have been covered in the literature ( e . g ., OECD , 2008 ; Garcia 2021 ). While many consider GPI as offering a more accurate indication of national progress than GDP , there is debate about the the choice of indices and the underlying data for estimating them . The GPI is calculated by adding-up the benefits and deducting the costs of economic , environmental and social externalities ( see Table 1 for an example ). It is usually compared to the GDP to identify whether additional economic growth , as measured by GDP , has actually been beneficial for people ’ s well-being . When the GDP increases at the cost of resources that are important for the environmental and social aspects of people ’ s well-being ; and these costs are higher than the benefits of the GDP growth , this growth can be considered fraught .
Regional Efforts to go beyond GDP There have been several initiatives undertaken to assess well-being at the regional level . While approaches differ , each of these measures is attempting to capture the more qualitative but still meaningful aspects of growth and prosperity . Thus , not only do they attempt to go “ beyond GDP ” but also , critical to regional measures , beyond national averages ( or “ beneath GDP ”) to provide a more informed picture of wellbeing for both national and local policy development . Recent initiatives that aim to cover selected regions , include ( OECD 2020 ):
Australia : In 2011 , the Australian Bureau of Statistics ( ABS ) published “ Measures of Australia ’ s Progress ” ( MAP ) as a result of extensive consultation with various stakeholders including communities . While it reports national outcomes across the main dimensions ( society , economy , governance and environment ) the 2013 edition of the MAP included regional outcomes . A Regional Well-Being Survey of residents living in Australia ’ s rural and regional areas was conducted by the University of Canberra in 2013 . It examines the well-being of people in rural and regional communities , and how well-being is influenced by the social , economic and environmental changes occurring in these communities . 1 Australia also produces a measure of well-being at the local government level . This report , by The Australian Centre of Excellence for Local Government focuses on policies to help local councils evaluate the progress of community programmes and local wellbeing to help improve local government ’ s capacity and accountability .
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