Hi, my name is Robert Costanza, I'm
a professor at the Crawford School
of Public Policy at the Australian National University.
I'm joined here in the studio today by two of my colleagues.
To my left is Ida Kubiszewski She
is an associate professor also at the Crawford
School of Public Policy.
And to her left is Lorenzo Fioramonti,
who is the Director of the Center for Governance
Innovation at the University of Pretoria in South Africa.
Today, we're going to talk about well-being,
what does that mean, how do we assess well-being
at the community level, at the state level,
at the national level, at the global level.
There's been, I think, a major change
in the world around this issue.
The UN recently, all the UN member states
signed onto the sustainable development goals.
There are 17 goals now.
These are intended to apply to all countries in the world, not
just developing countries.
And they are much broader in their intention
than simply maximizing the rate of economic growth or GDP.
They cover poverty, they cover education,
they cover protecting the marine environment
and the terrestrial environment.
They cover dealing urgently with climate change.
And these goals, I think, are intended to drive development
in a very different direction.
One problem with the goals is they are all
presented as independent goals.
There's 17 of them.
But we know that there are very clear tradeoffs and synergies
between these goals.
And we know that they all contribute
in various complex ways to the overall sustainable well-being
of people on planet Earth.
So the three of us, along with some other co-authors,
have recently published a paper in the journal, Ecological
Economics that takes a look at how
we can begin to build a set of indicators that really do look
at our sustainable well-being of people on earth,
what would we need to do that.
So before we get into that, I think
we're first going to talk a little bit about why
we need to make these changes, why
is this so important right now.
And one of the big problems is that since at least the end
of World War II we have relied globally on GDP growth
as a proxy for improving societal well-being.
And it's well-known, even by the creators of GDP,
that it was never designed as a measure of societal well-being.
It's a very specific measure of market activity in the economy.
So I want to first ask my colleague
Lorenzo, who's written a book recently called Gross National
Problem, that deals with all the reasons
why GDP is no longer an adequate goal for our national policies,
even though it's been consistently used
and it's probably the most well used index of progress
around the world.
So I'm going to have him talk a little bit about why
that needs to change.
What are the problems, what is the gross national problem,
Lorenzo?
Thanks, Bob.
It sounds paradoxical, but basically, for the past 80
years, the whole world was set on a certain track
to increase development and prosperity according to a model
that, even as you said, the creators had
warned against using it in policy, especially
in normal times.
Invented before the Second World War,
and to deal with the crisis, it was never
meant to be used as an indicator of success
in normal conditions.
And there are many reasons for this.
GDP is a measure of material consumption
within the formal economy.
It doesn't consider the many things
that actually create utility and welfare, let alone well-being.
Chopping trees increases GDP, but raising them doesn't.
Making people stay healthy doesn't increase GDP,
but actually sicknesses and diseases do that.
Every time we take out an insurance against crime,
against the natural disaster, and all of that,
we increase GDP, although we know
that's an expense that no reasonable person would like
to have in normal conditions.
So societies that somehow develop
in a way which is sustainable and equitable
tend to be seen by GDP as less progressive, as less
developed, as less prosperous.
And this has created a whole rat race
towards the wrong objectives.
And 80 years later, we have finally
come to terms with this reality, and now we're
trying to scramble to find another way of measuring
success and devise policies accordingly.
I like what you said in your book
as well, about that GDP was really
helpful to win World War II.
And so as a tool for understanding production
in that sense, of war material, and that sort of thing.
Absolutely.
It was essential and probably helped win the war.
But those days are gone, and now when
we replace old hard-line telephones
with cell phones that are cheaper and have more benefits,
they may cost less, and therefore, GDP goes down.
So it's really become a very poor proxy--
Absolutely.
--for wellbeing.
And there are alternatives that are out there.
And there's been a lot of research,
I think, over the years, that hasn't yet
managed to budge GDP.
But I know Ida has worked on one in particular called
the Genuine Progress Indicator.
So why don't you say a bit about that
and how that's better than GDP.
Thanks, Bob.
So there's actually hundreds if not thousands
of different alternative well-being measures to GDP.
They're mostly characterized in three groups.
One is where it takes GDP and adjusts it in some way.
And the Genuine Progress Indicator,
which I'll talk about in a second, is one of those.
But there's also ones that look at well-being or life
satisfaction directly.
So through surveys, for example, subjective well-being,
where it asks people how satisfied
are you with your life, whether it's different components
or life overall.
And there's a third kind of indicator
where it combines various different indicators.
So it might look at crime, or health,
or subjective well-being, and put it all together
into one indicator.
So, for example, the Genuine Progress Indicator
starts with a large component of GDP, personal consumption,
and adjusts that for inequality, for various costs
that are, as Lorenzo said, currently seen as benefits.
So if we have a natural disaster, GDP goes up.
It's considered benefit, but it's really
a cost to society in many ways.
But then it also adds certain things
that are benefits in society, but are not counted.
So volunteer work, household work,
moms staying at home to take care of kids,
not counted in GDP.
But those are important components of our society.
And it does increase well-being.
So for example, if somebody has a garden in the backyard
and decides to pick the vegetables from the garden
and have a salad for dinner, versus going and buying
a TV dinner, that doesn't raise GDP,
but it's much healthier for you often.
And so the components like that are not considered in GDP,
but are often considered in some of these well-being indicators.
And in 2013, a group of us published a paper
that looked at Genuine Progress Indicator,
and what it's been doing for 17 countries.
And there's about 25 countries that have now calculated it.
And what we found was that early on, GDP and GPI do go up
together as the basic needs need to be fulfilled,
but then GPI levels off or even decreases
while GDP still keeps growing.
And a lot of that difference is due to environmental costs,
so like Lorenzo said, natural disasters or oil spills.
Or air pollution, water pollution.
Correct, any of those, which are actually
decreasing well-being of society,
or increasing GDP, so environment
costs, and the other one is the cost of inequality.
And there's been a lot of work done by, for example,
Kate Pickett and Richard Wilkinson.
They wrote a book called The Spirit Level, which
shows that there's considerable basically detriments to society
as inequalities go up, as an equality-- between countries
and within countries.
So health goes down, educational levels go down,
and there's a lot of indicators that do go down
as inequality goes up.
And so GPI, we found that no matter what society we
looked at, some that GPI leveled off
or decrease a little bit later.
So China was around 1995, while us around 1978.
When we put all that together, all those countries, globally,
we found the same trend.
And around 1980, GDP kept going up,
GPI leveled off or decreased.
We also found that a lot of the other well-being indicators
did about the same thing, around that time, started
leveling off or going down while GDP kept growing.
And I know there are a couple of states in the United States
that have adopted GPI--
They do.
--as one of their official indicators.
Yeah, so Maryland was the first one to adopt it.
About five six years ago, Maryland
was the first state, first government to officially adopt
an alternative indicator.
They adopted the GPI, General Progress Indicator,
and have measured it since then.
Since then, the State of Vermont has also done it.
And then other states, quite a few other states in the US
have been looking into, including Oregon, Washington,
Utah, Hawaii, and a few others.
No country government has yet adopted it.
So Bhutan, for example, has GNH, the Gross National Happiness
Indicator, which is a subjective indicator.
So it basically is a big survey asking people about their life
satisfaction.
So it works a little differently.
But those two states are the only two governments
that have actually adopted a different indicator.
And so what seems to be missing though from GPI is, or at least
two of the main things, are the positive contributions
of natural ecosystems, ecosystem services and natural capital.
The costs are included of air pollution, water pollution,
et cetera, but not the benefits.
And likewise, not the benefits of having a good community,
and having good social capital, and good relationships.
And those things are also degrading,
those contributions are degrading.
And so we're not picking that up when we just
talked about the GDP.
In the paper that we published recently,
we talk about how to integrate some
of these different elements, how would we
add on the positive contributions,
how would we integrate the subjective well-being
indicators with the more objective indicators,
because people don't perceive all the benefits that they get.
But it's certainly important to recognize and survey what
people do perceive as benefits.
And certainly, their social interactions
and many other things are things that they perceive as benefits.
And they also perceive that they're not
getting better, that their well-being has been declining,
that the growth in GDP has been going
to the 1% of the population, not to everyone.
So just for that reason alone, the distribution of income
has been going down.
So how do we then move beyond even GPI or GPI 2.0?
What's the appropriate measures that need to be developed?
Maybe Lorenzo, you want to take that one.
I think what you said is completely right.
GPI was a way of correcting GDP by realizing something that,
again, as I said, for 80 years we haven't realized,
is that there are many negatives in GDP.
No reasonable society would want them to increase,
and yet we see them as bonuses when the economy grows.
And so GPI sort of orders the house.
It's a bit of a housekeeping device,
like ordering things in the house,
and saying certain things are not positive,
they should go down, other things should go up.
But it doesn't include things that were initially
never considered as part of the economy,
as you said, natural capital, natural ecosystems, and so
on and so forth.
Now we do have a lot of studies, and we
have a lot of tools that can help us do that.
For as long as we don't do that, our natural system
and social systems will be seen by politicians
as being of no consequence to development and prosperity.
And when things are of no consequence,
chances are the policies will be designed either to neglect them
or to destroy them, which is what has
been happening for many years.
So we need to do that.
And we need to move away probably
from a simple correction of GDP to a totally new system,
a system which is in line with the aspirations
of contemporary societies.
As you said, GDP is not only wrong because
of the many things that it measures in a very inefficient
way, but also because it sees increasing
costs as a sign of development.
But now we know the new technologies are actually
lowering costs by increasing consumer surplus.
So the benefits that we receive--
every time I call my mom on WhatsApp, it's for free,
but it's a better quality than 10 to 20 years ago,
when I used to call her on the phone.
And the same applies to technological advancements
in many technologies.
We know that the digital surplus in many economies
these days is far beyond conventional industrial
production.
So our economies are growing because of Google, WhatsApp,
Airbnb, Facebook, less and less because of the BMW, Chrysler,
and so on and so forth.
So we do need a system of data gathering, which
is in line with the new economies that we have.
That includes natural systems, social systems,
and our innovative capacities that
are totally neglected by GDP.
So this is not only important for ecologists
and for social scientists.
I think it would be important for the digital industry,
the new innovators in the Silicon Valley, all
those young entrepreneurs that really like
to build an economy which is much more
light than the conventional one, but much heavier
on well-being and prosperity.
Yeah and our data collection abilities
are so much better than when GDP was first designed,
where basically you had to do things
on hand calculators, mechanical calculators even.
And even today, a lot of the data that goes into GDP
is from paper surveys that are sent around.
You won't believe that most statistical agencies still
collect data, quarterly data on GDP by faxes.
They still-- they're probably the only ones in the world
still using a fax machine.
And our ability to understand those complex
interconnections as well.
Underlying GDP is this system of national accounts, which
is a very linear system, input-output tables
of the economy, vary aggregated, very static.
And we can do a lot better than that these
days, because we understand the dynamics of complex systems
much more.
We can look at stocks end flows and how they interact.
And we can use that sort of modeling
to not only look in the past, but also
to project into the future under different scenarios.
I think this is becoming critical these days.
So, yeah, there's a huge need to make these kinds of changes.
And I think the sustainable development goals process is
certainly pushing that agenda.
And, I think, at least we are confident
that some major changes will be in the cards coming forward.
So maybe we'll end it there.
As I said, we did produce a paper,
a journal article for Ecological Economics just recently.
This came out just last year, that's titled,
"Modeling and Measuring Sustainable Well-Being
in Connection with the UN Sustainable Development Goals."
It covers some of the topics that we've been talking about,
but if you want to learn more about that.
And we've also published other background material
on many of these problems.
And so I hope this was informative.
And I hope that we, as a society,
can shift our societal goals quickly to measuring well-being
in the broad sense that we've been talking about in order
to move our societies to a more desirable and sustainable
future.
Thank you.