Change What We Measure: An Alternative to GDP

Imagine a doctor who judged your health by measuring one thing: how much you spend per day. The more you consume — on food, medication, doctor's bills, taxi rides to the emergency room — the healthier you must be. A heart attack would be an excellent result: all those ambulances, surgeries, and rehab sessions add up nicely. It would be absurd. And yet this is almost exactly how we have measured the health of entire societies for nearly a hundred years.

That measuring stick is called gross domestic product, or GDP. It may well be the most influential number in the world. It decides whether a government is "doing a good job," whether an economy is "growing," whether we are in a recession or not. Newspapers lead with it. Elections are won and lost over it. Yet few people stop to ask what it actually counts — and, more importantly, what it overlooks entirely.

A number born from a crisis

GDP is not a law of nature. It was invented, by people, at a very specific moment. In the 1930s, in the middle of the Great Depression, the United States Congress asked the economist Simon Kuznets to find a way to map the damage to the economy. No one knew how deep the crisis ran, because no one could measure the economy as a whole. Kuznets built the first national accounts, and from them grew what we now call GDP.

Here is the striking part: Kuznets himself explicitly warned against using his invention as a measure of well-being. "The welfare of a nation," he wrote to Congress in 1934, "can scarcely be inferred from a measurement of national income." The tool was meant to count production during an emergency — not to judge whether people are doing well. That warning was ignored. The figure was simple, it was a single number, and it grew. And so an accounting device born of crisis quietly became the compass for an entire society.

What GDP fails to see

The clearest critique came not from an economist but from a politician. In March 1968, months before his death, Robert Kennedy addressed students at the University of Kansas. Gross national product, he said, counts air pollution and cigarette advertising and the locks on our doors and the prisons for those who break them. It counts napalm and nuclear warheads. But, he continued, "it does not allow for the health of our children, the quality of their education, or the joy of their play." It measures, he concluded, "everything, in short, except that which makes life worthwhile."

Those words are more than half a century old and still painfully accurate. Consider a few concrete examples. An old-growth forest has, according to GDP, no value at all — until you cut it down and sell the timber. Only then does it appear in the figures. An oil spill is, paradoxically, good for GDP: the cleanup, the lawyers, the crews, all of it counts as economic activity. A traffic jam holding thousands of people hostage burns fuel and sells roadside coffee — excellent for the numbers. A divorce means two households, two lawyers, two rents. Growth.

And the reverse: everything that is free and valuable goes uncounted. The parent raising their children, the neighbour caring for someone sick, the volunteer at the food bank, the forest storing carbon and cleaning the air — economically invisible. The New Zealand economist Marilyn Waring showed in her landmark book If Women Counted how the entire system simply left out unpaid care work, most of it done by women. According to the official figures, it contributed nothing. According to real life, it held everything together.

What we measure shapes what we do

This is not academic nitpicking. It strikes at the heart of how a society makes choices. There is an old rule of management, often called "what gets measured gets managed": once a number becomes a target, people and institutions optimise for it, sometimes at the expense of everything the number does not capture. Measure a hospital by the number of patients treated, and you get lots of treatments — not necessarily healthy people. Measure a country by GDP, and you get growth in production and consumption — not necessarily a better life.

The consequences are all around us. Policies that push the numbers up while crowding out the quiet, the nature, the time, and the connection that people actually need. An economy that runs faster and faster while mental health declines, the planet warms, and people feel exhausted on a treadmill they never chose. The problem is not that people want the wrong things. The problem is that our compass points to the wrong north.

It can be done differently: places already doing it

The good news is that this is not a utopia. Around the world, governments and cities have stopped waiting and started measuring differently.

The small Himalayan kingdom of Bhutan was the pioneer. As early as the 1970s, its king declared that "gross national happiness is more important than gross national product." What first sounded like a nice slogan became a serious measurement system: Bhutan surveys its population across nine domains, from psychological well-being and health to time use, education, culture, governance, and the resilience of nature. Policy proposals are tested against their effect on that happiness, not just on the economy.

In 2019, New Zealand did something that made the world look up: it presented the first national well-being budget. Instead of allocating money based on what would make the economy grow, the government chose its spending based on what would genuinely improve people's lives — with child poverty and mental health as top priorities. The finance minister put it bluntly: a growing economy means nothing if people are not better off because of it.

Wales went a step further and wrote it into law. The Well-being of Future Generations Act of 2015 requires every public body to consider, in every decision, the consequences for the people who are not here yet — the generations after us. There is even a commissioner who guards the interests of future generations. Imagine that: a country where an official is legally required to explain how a road project or a school reform will play out for your grandchildren.

And closer to home: in 2020 the city of Amsterdam embraced the so-called 'doughnut model' developed by the British economist Kate Raworth. The image is as simple as it is powerful: a doughnut with an inner ring — the social foundation no one should fall below, such as food, shelter, health, and a voice — and an outer ring — the ecological ceiling we must not overshoot, such as a stable climate and healthy soils. The art is for all of us to live in the space between: enough for everyone, without asking too much of the earth. Amsterdam uses it to weigh decisions about housing, work, and raw materials.

These places are not alone. Countries such as Scotland, Iceland, Finland, and New Zealand have joined forces to share what they learn about an economy that puts well-being first. Internationally, broader yardsticks have existed for years, such as the Human Development Index, which measures life expectancy and education alongside income, and the Genuine Progress Indicator, which subtracts the real costs of pollution and depletion from the figure. The tools exist. What is missing is not the technique, but the choice.

So what should we measure instead?

If GDP counts the wrong things, what are the right ones? The answer is surprisingly intuitive — it is precisely the things people name when you ask them what a good life means.

Financial security, so people can breathe instead of fighting to make ends meet month after month. Health, of body and mind alike. Time — enough time to rest, to care, to play, to find meaning. Connection: strong relationships and communities, because loneliness makes people as ill as smoking does. A healthy natural world that can still carry our children. And the sense that our work and our lives actually matter. These are measurable things. We simply choose not to measure them.

A different compass

GDP is not bad because production does not matter — of course we need a working economy. It is dangerous because it poses as a measure of progress when it is not. It is a speedometer we have started using as a map. And a speedometer can tell you exactly how fast you are going while you drive straight toward a cliff.

At Happonomy, we start from a simple idea: the economy is not an end in itself, but a means to support the quality of our lives. If that is our starting point, then the numbers we steer by should also be about that life — about what people truly need and value. Changing what we measure sounds technical, but it is, at heart, a deeply human question: where do we actually want to go? Once we dare to ask the right question, the answer begins to change on its own. And then an economy emerges that does not merely grow, but helps life flourish.