A person’s happiness is said to be measurable using a term known as “standard of living”. This term is often being compared between one country to another, mainly using gross domestic product (GDP) as a measure of indicator. According to Cassiers (2007), GDP was first introduced succeeding the Great Depression as a tool used in guiding back the economy in line with the economic objectives whilst bringing United States out of depression. GDP measures the value of final goods and services that are produced by a country. At the present time, GDP are increasingly argued to be insufficient in measuring the model of development in a country. Economic growth solely does not represent the overall well-being of a country without taking into account both economic and social progress. Thus, this essay assesses the usefulness of GDP that acts as an indicator in measuring a country’s social progress. It argues that there are several indicators that are better in comparing the well-being of each countries that includes health, education and happiness of the nation.
Social progress helps in complementing GDP by analysing social and environmental factors of the country in creating a better image of how the nation is doing. It informs the country on their means of survival, helping them to build a better nation by giving opportunities to each individual in reaching their full potential. Accordingly, it is inexact to say that GDP does not capture the well-being of the country. It is used to calculate the production of goods and services, which at the very least analyses the utility of consumers in the market economy. For certain countries, GDP are seen to be useful by recognising research and development (R&D) for the nation as an investment to the country (OECD Observer, 2005). Through such R&D, social progress can be evaluated better for the sake of the nation. GDP gives a simple and clear finding of a national income of a country. With a quantitative characteristic, GDP is a useful indicator to directly compare the progress of countries across the nation. GDP is also highly reliable in providing information regarding rates of life expectancy at birth and infant mortality which represent the quality of life. Thus, GDP is seen to be highly associated with societal progress (The FRED Blog, 2017).
In spite of this, many are still questioning on how well GDP measures our social progress as it is still insufficient in measuring the non-economic factors that add up to the social progress that is being discussed. Based on (Kurtzleben, 2014), GDP does not measure the degree of environmental pollution that is experienced in the country. Other measures including crime rates, health and the level of happiness in the nation is certainly not being deliberated through the use of GDP. Countries that show a high GDP rate, namely China and India, still bear social problems and this does not reflect their respective statistics of GDP. The nation is led to believe that with a high disposable income, they would be able to spend more on goods and services. Hence, making them happy without realising the negative impacts it would bring to our environment. Statistical findings based on (Social Progress Imperative, 2016) suggests that countries with lower level of income shows much higher level of social progress. Relatively, countries with a higher GDP income such as Saudi Arabia and United Arab Emirates demonstrates a low social progress. With that, it is evident that GDP does not directly reflect an entirely good social progress.
New Zealand’s government aims to be the first country that looks into the success of their country in the social, cultural and environmental context of the nation (Walters, 2018). Their aim is to stop focusing the country’s budget purely on economic measures and start including the well-being of New Zealanders. Emphasising on such aspects the government of New Zealand can improve on the nation’s security and the quality of the environment that they live in. Correspondingly, governments of other countries should ponder on shifting GDP into using other measures of indicator that helps in balancing their economic and social progress. Bhutan and two states in the United States, Vermont and Maryland have successfully shifted their measures and more countries are likely to be following the footsteps of these countries. Bhutan adopted the Gross National Happiness (GNH) index, which concentrates on four pillars of governance, economic development, culture and environment (Kelly, 2012). Among various plans, Bhutan implements the “Green Education” program that shows positive changes of a child’s emotional well-being in the last four years. The program aims to educate children on basic agricultural techniques and environmental protection. In addition to that, teachers are also being trained by the government to be an exemplar to the students by encouraging them to recycle materials that are used at schools. Targeting young children as a one of the main platforms in social change is significant as they will become the change of nation in the future. Similarly in the United States, Vermont and Maryland has accepted the use of Genuine Progress Indicator (GPI) that looks into twenty-five aspects that relate to the citizen’s well-being beyond the sole effort on economic success (Costanza, 2014). The aspects used in GPI are among the best measures that evaluate not only economic output but the costs that are associated with it. Research done by Maryland declares that with the use of GPI can help the state in lessening 25 percent of the problem of greenhouse gases by the year 2020 (Lew, Mcelwee, 2014). This reflects that if a government using GPI as an indicator, they can see a better insight of the nation’s welfare, which allows them to easily detect weaknesses in providing a holistic environment for their citizen.
Beyond the advantages of government shifting its measures away from GDP, there are also disadvantages of it to the government. Taking the same example, although Bhutan shows a rise in the social progress of its nation through their use of GNH as an indicator, they are regarded as one of the poorest nations on the planet (Kelly, 2012). Bhutan struggles with a constant increase in their population, along with the boost in global food prices. Consequently, this shows that GDP plays an important role in steering the country’s economy. Bhutan’s measure of GNH model may cause their nation to suffer with the current increase in environmental and social pressures. Similarly, GPI has a few disadvantages to the government if it were to be considered as a replacement to GDP as a current measure of indicator. According to (Pettinger, 2011), non-economic variables including social progress are regarded as subjective and it is complex to be assigned as an economic value to be compared within countries. Due to that, GDP is seen to be simpler and less tardy for the government. Moreover, it is impossible in giving monetary value towards non-marketed goods such as environmental pollution that is caused by production of electricity as the costs is not included with the price of the electricity offered to consumers (The genuine-progress, n.d.).
In this business era, it is difficult to exactly measure both the country’s economic and social progress at the same time. GDP that are internationally used in most countries are simple and efficient in making statements about the progress of the economy in a certain country. Still, it fails to comprehend with issues involving health, education and leisure time. With the reasons stated, it is evident that government should shift its measures towards indicators such as GNH or GPI. Countries of the world should start prioritising on making sure that the social progress of their country is at a considerable level. The reason being that even though a country has a high GDP, but equal rights are not highly practised towards women and minority groups, hence the country still does not portray a great economy (Moeko, n.d.).