Well-being as a central policy goal

Well-being is a condition in which people are healthy and happy. This primarily depends on people's ability to comfortably meet their basic physical, psychological and social needs. Gross domestic product (GDP), on the other hand, is the main indicator for measuring economic output within a country. It includes all the goods and services we produce and consume irrespective of their social and environmental value or impact. Present politics remain largely focussed on growing GDP as a means to improve living standards. But beyond a certain point, increasing economic output brings more social and environmental damage than benefits. Many alternative indicators of progress have already been proposed and implemented in countries such as New Zealand, Finland and Iceland. Using such indicators will help our economies to serve the well-being of all. At the same time, strict policies should prevent economic development from degrading the ecosystems on which it relies, from exploiting people’s workforce and causing extra harm to communities in the Global South. 


Gross Domestic Product (GDP) measures “the total amount spent on final goods and services” in a country during a certain period and is the “single most important indicator to capture economic activity”. When US economist Simon Kuznets first introduced it to American Congress in the Depression of the 1930s, he warned that GDP should not be used as a welfare indicator because it makes no distinction between the kind and quality of economic activity. However, after 1945, GDP became the main indicator governments use to inform their policy choices.

Using GDP as an indicator for progress has several limitations. First, GDP does not address growing economic inequality within society. Second, because GDP accounts for monetary value only,  it excludes all unpaid work, like voluntary and care work, even if this type of work (raising children, caring for the sick and elderly) is important, hard, and time-consuming. At the same time, because GDP doesn’t distinguish between kinds of activities, harmful events can lead to an increase in the rate of production in monetary terms. For example, a massive oil spill leads to economic activities, like cleaning, and thus appears as ‘good’ for a society that measures its well-being in terms of GDP increase. More in general, GDP hides the excessive material and energy requirements of production and consumption, since environmental and social costs are still mostly not included in the price of goods.

These are some of the reasons why GDP tells us little about how society, let alone the environment, is doing. Still, GDP remains the one monetary indicator by which many governments and international organizations make important policy decisions, like how much to invest in healthcare, education and public services. As ecological crises and global inequalities increase, many politicians and civil society organizations are calling for alternative economic indicators to base budgetary decisions on and to steer economies to sustainable, social paths. 

Two alternative well-being indicators explicitly address the problem of socially and ecologically harmful activities.The Genuine Progress Index (GPI), for example, was developed in the 1990s in the US. The GPI included the state of social, ecological and human conditions in a total of 26 indicators, so that pollution, for example, has a negative effect on its score. The GPI tracks well-being in terms of, e.g., education, leisure, housework, commuting, and family changes. Studies in the historical evolution of GDP and GPI in the US and Finland showed that, after a joint increase in both indicators  in the ‘70s and ‘80s, GPI has remained constant despite increasing GDP.  In other words, well-being has stagnated in growing high-income countries since at least the 1980s.

In Belgium, Ghent University has been compiling the Index for Sustainable Economic Welfare (ISEW) for the Flemish Government. Similar to GPI, the ISEW does distinguish between socially and ecologically ‘positive’ and ‘negative’ economic activity.

Various countries are experimenting with using well-being indicators as a policy compass, for example Finland, New Zealand, Scotland and Iceland. The Wellbeing Economy Alliance (WEAll) combines many of these initiatives and serves as a resource for governments that want to put the needs of people and planet first. Bhutan and Costa Rica, two middle-income countries and members of the WEAll, are both examples of countries with very high levels of well-being and a relatively low ecological footprint. There are many alternative indicators to choose from and experience on these indicators is accumulating. If a national government is serious about social well-being and planetary health, this is the moment to try them out.

Adopting one of these well-being indicators to guide policy decisions - and saying farewell to the flawed GDP - is one step towards an economy that can flourish regardless of constant production growth. Together with the transformative policy proposals that we outline in this manifesto, we believe it is possible to realize an economy that drops the fixation on economic growth and rather prioritizes societal and ecological well-being.

This explainer is not necessarily endorsed by all coalition partners

Further reading