While the historical rationale of GDP, and its unintentional shortcomings, is recognized, today moving beyond GDP is a competitive necessity to shift the measurement of our society to more comprehensive instruments to measure resiliency, sustainable economic growth and well-being.
There is a movement toward adoption of a more revealing, more realistic, measurable instrument. GDP meet SPI!
GDP has become an attractive measure for those seeking a quick win, without much foresight for its consequences. Countries still use a 20th-century metric to measure wellbeing: Gross Domestic Product, or GDP.
GDP provides measurements of output, income and expenditure quite well, and these are needed to understand and devise fiscal and monetary policies. But this measure flatly fails when it comes to wellbeing. Its founder, Simon Kuznets, cautioned half a century ago that it is useful mainly in tracking income. More recently, other economists suggest knowing change in per capita wealth of all types is key to monitoring sustainability.
Unfortunately, the “radar” to track progress is far from satisfactory. Hence, reliable metrics to know how we are performing on the yardsticks of our economy, sustainability and social harmony are needed.
While the systematic use of GDP in the past decades has lifted hundreds of millions of people from poverty, unexpected collateral like environmental disasters and climate change have reached new critical levels, which require, among many other things, a measurement revolution.
There is international interest in a tool that still captures financial and produced capital, but also captures the skills in our workforce (human capital), the cohesion in our society (social capital) and the value of our environment (natural capital).
Enter the SPI!
This international interest in, and desire for, a better measurement is emerging in The Social Progress Index (SPI), which positions itself as a new holistic framework of reference. There is a vision amongst the experts for the Social Progress Index and GDP to be part of the same agenda, as we strive towards inclusive growth. This could be where the legacy of the past meets the needs of the future.
What you measure is what you change! If there are direct measures of human, social and natural capital, then we can measure our society’s progress toward resilience, globally competitive skills and, happiness in a direct and more meaningful way. Good jobs, Wellbeing, Environment, Fairness and Health are at the forefront of economic sustainability or sustainable development. GDP was not intended to measure these. Now we can use the Social Progress Index to do so.
(Example of SPI measurement report)