What defines the best country to live in? Is it the culinary delights, the longevity of its citizens, or perhaps the climate? For over seven decades, governments have leaned heavily on a singular metric to answer this complex question. This number, which influences elections, stock markets, and policy-making, is the Gross Domestic Product (GDP). However, its original purpose was never to serve as a comprehensive measure of a nation’s well-being, and some argue that the world is overly fixated on its perpetual growth.
GDP, or Gross Domestic Product, was conceived by economist Simon Kuznets in the 1930s as a straightforward way to gauge the size of an economy. It represents the total monetary value of all goods and services produced and sold within a country. Today, GDP per capita, which divides the total GDP by the population, is often seen as an indicator of well-being. However, GDP does not account for what is produced or who benefits from it. For instance, a million dollars spent on weapons contributes equally to GDP as a million dollars spent on vaccines or food.
Moreover, GDP overlooks the societal value of services like public education and firefighting, as these are not sold on the market. In countries where wealth is concentrated among a few, GDP per capita can misrepresent the average person’s financial situation. Historically, from 1945 to 1970, rising GDP correlated with increased wages and improved quality of life in many Western countries. However, by the 1980s, this link weakened as wages stagnated or declined, and wealth became concentrated among a smaller segment of the population.
The allure of encapsulating a nation’s well-being in a single figure remains strong. In 1972, Bhutan’s King Jigme Singye Wangchuk introduced the concept of Gross National Happiness (GNH) as an alternative to GDP. GNH considers factors such as health, education, community strength, and living standards, asking citizens questions like, “How happy do you think your family members are?” and “What was your day like yesterday?”
The United Nations’ Human Development Index (HDI) is a more widely recognized metric, incorporating health, education, and income per capita to estimate overall well-being. Meanwhile, the Sustainable Development Index (SDI) evaluates both well-being and the environmental impact of economic growth, distilling these into a single number. Costa Rica stands out as a country that has successfully balanced economic growth with environmental sustainability, achieving better well-being outcomes like life expectancy than some of the world’s wealthiest nations. Other countries, such as Colombia and Jordan, have also made significant strides.
Ultimately, any attempt to reduce a country’s quality of life to a single number has inherent limitations. Increasingly, experts advocate for a dashboard approach that highlights the various factors a single number might obscure. This method is particularly relevant given that people have diverse priorities, and the answer to which country is best to live in depends on individual perspectives.
If you were to design a well-being metric for your country, what would you value, and what criteria would you measure? The quest for the best country to live in is as much about personal values as it is about economic indicators.
Using an online GDP simulator, explore how different types of spending (e.g., healthcare, education, military) impact a country’s GDP. Adjust the spending categories and observe the changes in GDP. Reflect on how these changes might affect the well-being of citizens.
Form groups and hold a debate on the effectiveness of GDP compared to alternative metrics like Gross National Happiness (GNH) and the Human Development Index (HDI). Each group should research and present arguments for their assigned metric, considering its strengths and limitations.
Design a well-being index for your country. Decide on the factors you believe are most important (e.g., health, education, environmental sustainability) and determine how you would measure them. Present your index to the class and explain why you chose those specific criteria.
Research a country that has adopted an alternative metric to GDP, such as Bhutan with GNH or Costa Rica with the Sustainable Development Index (SDI). Analyze how this metric has influenced the country’s policies and quality of life. Present your findings in a report or presentation.
Conduct a survey among your peers and family members to gather data on what they believe are the most important factors for a high quality of life. Compile the results and compare them to the factors considered in GDP, GNH, HDI, and SDI. Discuss any similarities and differences in a class discussion.
GDP – Gross Domestic Product (GDP) is the total value of all goods and services produced within a country’s borders in a specific time period, often used as an indicator of a country’s economic health. – The GDP of the country increased by 3% last year, indicating a growing economy.
Well-being – Well-being refers to the state of being comfortable, healthy, or happy, often used in economics and sociology to measure the quality of life of individuals or societies. – Policies that focus on improving well-being can lead to a more productive and satisfied society.
Happiness – Happiness in economics and sociology is often considered a measure of subjective well-being and life satisfaction, which can influence economic behavior and societal development. – Researchers found that higher income levels do not always correlate with increased happiness.
Education – Education is the process of receiving or giving systematic instruction, especially at a school or university, and is a key factor in economic development and social progress. – Investing in education can lead to a more skilled workforce and a stronger economy.
Society – Society is a group of individuals involved in persistent social interaction, or a large social group sharing the same geographical or social territory, typically subject to the same political authority and dominant cultural expectations. – A society that values equality and justice tends to have a more stable economy.
Economy – The economy is the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated, often measured by GDP, employment rates, and other economic indicators. – The global economy has been affected by various factors, including technological advancements and trade policies.
Sustainability – Sustainability in economics refers to the ability to maintain economic growth without depleting natural resources or harming the environment, ensuring long-term ecological balance. – Companies are increasingly focusing on sustainability to ensure their operations do not harm the environment.
Income – Income is the money received, especially on a regular basis, for work or through investments, and is a crucial factor in determining an individual’s or household’s economic status. – Disparities in income can lead to significant differences in quality of life within a society.
Quality – Quality in economics and sociology often refers to the standard of something as measured against other things of a similar kind, or the degree of excellence of something, such as life, products, or services. – Improving the quality of public services can enhance the overall well-being of a community.
Metrics – Metrics are standards of measurement by which efficiency, performance, progress, or quality of a plan, process, or product can be assessed, often used in economics to evaluate economic performance. – Economists use various metrics, such as unemployment rates and inflation, to assess the health of an economy.
