Beyond GDP: UK to Measure Well-Being

The UK is trying out a new way to see if government policies are improving people’s lives: ask.
Mother and Daughter, Photo by Rolands Lakis

The UK government's decision to measure well-being is based on the concept that real happiness can't be found in GDP, but rather in more subjective indicators—like the quality of people's relationships.

Photo by Rolands Lakis.

In November, UK Prime Minister David Cameron announced that, to help guide national policy, the British government would begin to measure the subjective well-being of its citizens. The announcement was the latest evidence of a growing awareness among governments and economists that Gross Domestic Product (GDP) and other traditional metrics of economic progress fail to measure the kind of progress that makes life better.

The British government’s decision to measure subjective well-being (rather than, say, objective measures of mental and physical health) underscored the growing debate about what measurements should replace the outdated focus on economic growth.

The Problem with GDP

Cameron explained that the change was about “measuring our progress as a country not just by how our economy is growing, but by how our lives are improving . . . not just by our standard of living, but by our quality of life.” Indeed, GDP was never intended to be used as an indicator of social progress. Simon Kuznets, the economist who helped the U.S Department of Commerce standardize the measure of gross national product , acknowledged that “a nation’s welfare can scarcely be inferred from a measurement of national income.” GDP can go up even in times of suffering: when a country is hit by an earthquake, GDP may increase because of the extra spending on reconstruction. High levels of illness bump drug sales and hospital bills, leading to an increase in a country’s economic activity. But for the last 60 years, GDP has been the main tool in the measurement of people’s well-being.

The British government’s decision is part of a growing acknowledgment that objective (and mainly economic) data can’t give us the whole picture—and may, in fact, predispose us to promote economic growth at the cost of well-being. This UK announcement follows in the footsteps of a report commissioned last year by the French President, Nicolas Sarkozy, and written by Nobel economists Joseph Stiglitz and Amartya Sen, about alternative measures of progress. And around the globe, governments are changing the way they measure how well their country is doing. In Bhutan the government uses “Gross National Happiness” as the main indicator of the country’s development, and in Ecuador and Bolivia the indigenous concept of “buen vivir” (living well) has been incorporated into state constitutions. In the United States, Maryland is experimenting with a “Genuine Progress Indicator.”

Finding a Better Measurement

As awareness of the need for alternative indicators grows, so does the debate about what those indicators should be. In their report [pdf] to President Sarkozy, Joseph Stiglitz and Sen emphasized that a new measurement system “must, of necessity, be plural—because no single measure can summarize something as complex as the well-being of the members of society.” They recommended living standards, or material well-being, as “a good place to start” and recommended that measurements focus not on economic production but on the distribution of income, consumption, and wealth.

In contrast, the British government has decided to measure subjective well-being—what citizens have to say about the quality of their lives. The UK Office for National Statistics has been given the task of choosing several subjective well-being questions to be included in the Integrated Household Survey, the biggest source of social data on the UK after the census. The process has begun with a public consultation, involving both the general population and specialists, about what the focus of these questions should be.

The information will allow politicians—as well as the public—to assess the effectiveness of the government’s policies in terms that really matter to people. 

In addition to directly asking how people would rate their level of satisfaction with their lives (a commonly used question, and therefore most useful for making international comparisons), there are good reasons to design questions that will measure people’s senses of trust and belonging, of the quality of their relationships, of the level of autonomy they have over their lives.

Such questions aim to measure how people think and feel about their well-being. Using these measures allows for individual differences in identities and values to be expressed—for example, one person may answer a life satisfaction question by thinking mostly about their job security and salary, but somebody else may answer the same question by emphasizing their family relationships and health. This means that data on subjective well-being can be used to tell us what really matters to people, not what politicians think matters.

In the UK, collecting this information via the Integrated Household Survey links it to a large amount of objective data which can then be used to identify links between people’s subjective well-being or experiences, and other objective factors—including economic activity, education, health and disability, identity, place of residence, and income. This will provide information on the impact of social, economic, cultural and physical conditions on people’s well-being, which can then be used to shape policy priorities. The real test will therefore come with the results of the survey, when we will see whether and how the UK government uses this new information.

The information will also allow politicians—as well as the public—to assess the effectiveness of the government’s policies in terms that really matter to people.  The ultimate aim of most policy is to improve lives, but without proper measures of well-being it can be difficult to assess whether this is being achieved.

The success of this measurement program depends a lot on exactly how the information is attained and then used, but this announcement may have signaled the start of a UK government agenda which puts well-being, rather than economic growth, at the heart of its public policy.