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Box 34 Making Progress
Richard Eckersley
To make progress, we have to be able to measure it.
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How we measure progress depends, in
turn, on how we define it. Progress can take many forms: better health and education, greater
equality and freedom, more choice and opportunity, less conflict and suffering.
However, progress in the modern era is principally defined in material terms – a rising standard
of living – and measured as growth in per capita income, or Gross Domestic Product (GDP).
Yet GDP, an aggregate measure of the value of economic production in a nation in a given
period, was never intended as a general measure of economic welfare, let alone quality of life.
Despite this, growth is pursued in the belief that, overall, it makes life better.
In the late 1980s, the Chilean economist Manfred Max-Neef and his colleagues proposed a
threshold hypothesis, which states that for every society there seems to be a period in which
economic growth (as conventionally measured) brings about an improvement in quality of
life, but only up to a point – the threshold point – beyond which, if there is more economic
growth, quality of life may begin to deteriorate.
The threshold hypothesis has been supported in the past decade by the development of indices,
such as the Genuine Progress Indicator (GPI), that adjust GDP for a range of social, economic
and environmental factors that GDP either ignores or measures inappropriately. These include
income distribution, unpaid housework and voluntary work, loss of natural resources, and the
costs of unemployment, crime and pollution. These ‘GDP analogues’ show that trends in GDP
and national wellbeing, once moving together, have diverged since about the mid-1970s in all
countries for which they have been constructed, including the US, UK and Australia.
Redefining Progress, the American non-profit public-policy organization that developed the
GPI, points out that GDP considers every expenditure as an addition to wellbeing, regardless
of what that expenditure is for or what effects it has. ‘By this reasoning, the nation’s economic
hero is the terminal cancer patient going through an expensive divorce, whose car is totalled
in a 20-car pile-up. The economic villain is the healthy person in a solid marriage who cooks
at home, walks to work and doesn’t smoke or gamble’. In other words, what economists call
‘growth’ is not always the same as what most people would consider ‘good’.
While national governments are slow to accept this truth about the relationship between
economic growth and wellbeing, powerful international bodies have come a long way in the
past few years towards embracing it. A 2000 report by the World Bank,
Quality of Growth
,
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stresses the importance of ‘the sources and patterns of growth to development outcomes’. It
questions why policymakers continue ‘to rely so heavily, and often solely, on the pace of GDP
growth as the measure of progress’.
As the Bank’s vice president and lead author of the report, Vinod Thomas, said at its launch:
‘Just as the quality of people’s diet, and not just the quantity of food they eat, influences their
health and life expectancy, the way in which growth is generated and distributed has profound
implications for people and their quality of life’.
In recent years, this message about growth has been reinforced by a range of subjective mea
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sures of progress and wellbeing, including life satisfaction and happiness, and people’s percep
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tions of quality of life and of the future. Trends in self-reported health and a range of chronic
health problems such as diabetes and depression also raise questions about the equation of
more with better.
Measuring progress is still in an exploratory and developmental phase: some national statisti-
cal agencies are collating objective indicators of economic, social and environmental trends;
public-interest organizations, which developed the GPI and similar indices, are updating and
refining these, applying them at the regional level, and experimenting with different aggregate
indicators.
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Positive Development
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