WELL-BEING IN ECONOMY: quality of life beyond gross domestic product (GDP)

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The indicators that are used to measure social progress often have a decisive influence on economic policy choices and significantly orient cultural, political and social processes.
Having indicators that are fit for purpose can therefore help to identify in a timely manner the needs and policy priorities aimed at improving decision-making processes from a virtuous perspective.
For more than fifty years there has been an ongoing debate in the international arena on the actual effectiveness of determining a country’s well-being through the sole parameter of GDP (Gross Domestic Product), so much so that it has been considered that the indicators on which to assess the progress of a society certainly cannot be exclusively economic, but must also take into account the social aspects, not merely measurable through it, within which situations of inequality and sustainability are not infrequently detected
Cautioning us against gross domestic product (GDP), which for many continues to be the benchmark for determining a country’s well-being, was its inventor, Simon Kuznets, who as early as the 1930s stated that : “…the well-being of a nation cannot be inferred from a measure of national income…”

It, by concisely measuring the sum of the final goods and services produced by a country, is misleading if it is to be understood as being directly associated with social welfare without instead being accompanied by other indicators. As an example, GDP takes no account of how the derived wealth is distributed, neglects in fact a number of activities that lack economic feedback (e.g., care of the the sick, intrafamilial contexts such as domestic work and care of offspring, etc.), just as it is indifferent to the damage that production causes to the environment (e.g. pollution of air, rivers, seas, etc.).
Over time-we will leave out the outdated ones-a number of other alternative indicators to GDP have therefore been created and produced.
One of these is the Green GDP, a parameter that evaluates a country’s economic growth on the basis of environmental consequences. However, this metric has many difficulties because it fails to effectively measure the loss of biodiversity or the effects of climate change caused by carbon dioxide emissions-the reports that are published, in fact, not infrequently differ in numbers considerably from one another.
In 2019, New Zealand Prime Minister Jacinda Arden launched the first Wellbeing Budget, a “budget for well-being” document where at its core is the concept of measuring the well-being of the population by considering all aspects of it and identifying 5 areas of intervention where to direct the country’s priorities:
1. strengthening mental health, particularly in youth;
2. reducing child poverty;
3. reduce the opportunity gap of indigenous peoples;
4. strengthen the digital economy;
5. working toward a low-carbon economy.
Other efforts along these lines are being made by many national and international bodies in finding solutions that aim not so much at merely replacing GDP but at identifying key indicators for equitable and sustainable well-being.
This is the case with the OECD (Organization for Economic Cooperation and Development) with the establishment of the WISE (Centre on Well-being, Inclusion, Sustainability and Equal Opportunity), the UN (United Nations Organization) with the SDG (Sustainable Development Goals), and the European Union (EU) with a more pragmatic approach, where economic growth and the good of citizens are interdependent and mutually reinforcing by aiming for long-term sustainable economic growth through:
• social protection;
• the reduction of inequality including gender inequality;
• improved flexibility at work;
• a better work-life balance;
• an increase in care;
• the assurance of quality health care;
• investment in preventive measures;
• increased access to education for all;
• promotion of education even for adults through lifelong learning.
At the national level since 2010, the BES (Benessere Equo e Sostenibile) project, a joint initiative of CNEL (National Council of Economy and Labor) and ISTAT (National Institute of Statistics), has been launched in order to make a significant contribution in this direction with the creation of 250 indicators that are partially overlapping but certainly complementary to those of the UN SDG.
Carlo Caloisi

SOURCES AND IN-DEPTH ANALYSIS
1. Overcoming the GDP: https://online.scuola.zanichelli.it/mondoeconomia-files/Approfondimenti/Mondo_economia_22049AFM_Biennio/4_1_PIL_22049.pdf ;
2. “BEYOND GDP” AND TOWARD WELFARE, FOR MORE EFFECTIVE POLICIES: https://eticaeconomia.it/oltre-il-pil-e-verso-il-benessere-per-politiche-piu-efficaci/ ;
3. GDP and the measurement of well-being (Chamber of Deputies, Italy): https://temi.camera.it/leg17/post/il_pil_e_il_benessere_equo_e_sostenibile-1.html?tema=temi/benessere_equo_e_sostenibile ;
4. Measuring Well-being and Progress: Well-being Research: https://www.oecd.org/wise/measuring-well-being-and-progress.htm ;
5. Take Action for the Sustainable Development Goals: https://www.un.org/sustainabledevelopment/sustainable-development-goals/ ;
6. Economics of well-being – going beyond GDP (European Union infographic): https://www.consilium.europa.eu/it/infographics/economy-wellbeing/ ;
7. Report on fair and sustainable welfare indicators (Ministry of Economy and Finance – MEF), 2022: https://www.mef.gov.it/inevidenza/2022/article_00071/Relazione-BES-2022_03_03.pdf
VIDEO
1. Quality of life – what matters to you?: https://www.youtube.com/watch?v=yYNjXRVFnTc&list=PLRAI_WnbL7Z1XM8GQKIXgkKVBMFJuCjTA&ab_channel=OECD ;
2. Well-being, progress, and going beyond GDP with economist Joseph Stiglitz: https://www.youtube.com/watch?v=G4d_-zaJXuA&ab_channel=OECD ;
3. Well-being as a priority for the next EU Commission: Building a resilient European Health Union: https://www.youtube.com/watch?v=8rD6IkAUm3o&ab_channel=EuropeanHealthForumGastein

IMAGES (in sequential order)
1. pch.vector on Freepik
2. pch.vector on Freepik
3. mohamed Hassan da Pixabay
4. redgreystock on Freepik

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