In response to increasing calls for the adoption of an alternative to GDP as a measure of economic progress, Feasta, in collaboration with the German research institute FEST, has just published a feasibility study for the development of a National Well-being Index (NWI) for Ireland.
The NWI in its current form consists of 20 components that are aggregated in order to obtain a single index, which the study applies to the years 2000-2014. FEST have significant experience in producing the index not just at Federal level but at regional and city level in Germany, however, this is the first time that a transnational comparative study has been carried out.
One of the components of the index is housework. “There’s been a lot of discussion lately about the fact that retired Irish women often have pensions that are a fraction of the size of mens’ pensions. They’re being penalised by the government for the fact that many of them spent so many years at home doing unpaid work, or caring for others.” notes Seán Ó Conláin, a member of Feasta’s Beyond GDP group and one of three Irish team members who contributed to the study. “This index takes a step towards rectifying that by making an attempt to account for the true worth of their contribution to society.”
Another component of the index is private consumption, which is weighted to take income inequality into account. Other components include heathcare, education, the value of voluntary work and environmental damage – the latter two of which are not included in GDP. According to John Sweeney (Professor Emeritus NUIM) and a member of the Irish team : “Classical economics ignores the costs imposed on society through environmental degradation; but components such as clean air, clean water and a healthy natural environment are essential aspects of well-being and quality of life. This index attempts to incorporate many such neglected variables in providing a fuller picture of what matters to people beyond the narrow confines of GDP.”
Amongst other findings, the study indicates that Ireland’s GDP boom prior to 2008 did not translate into a welfare boom of the same magnitude.
Moreover, during the period when Ireland experienced its highest GDP, from 2001-2004, the NWI remained static and even declined slightly: “While consumption and expenditure on health and education increased considerably, other social and environmental components mostly did not improve. In addition, income inequality increased.”(pp 18-19)
The study is modelled on an index that was developed by FEST to examine well-being on the local, state and federal levels in Germany, and includes a comparison with the German findings. “Although a big challenge to gather data at local level in Ireland, there is increasing awareness at local level of the importance of broader based metrics, to guide national strategy in an age of rural decline”, comments Ó Conláin.
The group believes that the study’s parameters could and should be adjusted to improve its accuracy and clarity, and they are seeking input and advice to this end. “Our hope is that this initial study – a significant step away from the widespread use of GDP as the fundamental measure of progress in Ireland – will trigger a lively debate on how best to measure well-being in Ireland, and thus to inform policy” comments Willi Kiefel (member of the study team).
The study can be downloaded here.
Please join in the discussion below if you wish to comment publicly on the study. To contact the authors, please email info@feasta.org .
Edit, October 19: corrected to clarify that healthcare and education are included in GDP measurements, while voluntary work and environmental damage are not.
This seems like a good first step towards a better measure of wellbeing than GDP. However, I’m concerned that some of the components indexed as positive in the NWI aren’t necessarily things we want more of.
If I’m understanding correctly, consumption (albeit weighted for equality) is the main component. So the assumption seems to be that the more consumption, the better.
Even if we take into account the damage caused by traffic jams etc, and even if things are shared out reasonably well, is having more stuff always intrinsically better?
Also, am I right in thinking that the more housework is being done, the better, too? If so, this conjures up odd images!
Perhaps it would make more sense to argue that there’s an optimal ‘Goldilocks’ range for well-being – i.e., we need a certain level of consumption and to do a certain amount of housework, but it isn’t good to have too much of either of those things.
I agree with Caroline. Surely we should reduce consumption which has a direct or indirect link to use of finite earth resources and increased GHG emissions? We should share reduced consumption.
Dear Caroline Whyte,
as one of the co-authors of the NWI study I want to react on your very valuable remark. Consumption gives welfare to people, I think, this cannot be denied. If we would try to value only specific types and quantities of consumption as positive and others as negative then we would not be far away from trying to tell people what they should consume and what not. I would prefer to leave this to their own decision. The negative social and ecological effects of consumption are part of other components of the NWI and will be subtracted there.
Of course, there can be too much housework. But where is the limit? I personally prefer that people take that decision for themselves. Also here, negative ecological and social effects should be covered by other components.
That’s an interesting tension between welfare-via-consumption and collective-planetary-wellbeing. I’m sure Hans is right in asserting that ‘consumption gives welfare’ and we should be measuring subjective wellbeing (while at the same time hopefully educating consumers away from #extremeconsumption). But as Eric and Caroline are perhaps hinting at, if we avoid value judgements, if we don’t attempt the dreaded (from a freemarket perspective) task of ‘picking winners’ then unbridled consumerism may kill the planet.
So the trick is perhaps to keep developing the’ NWI as an alternative to GDP as a measure of progress’ agenda while encouraging the questioning of NWI elements and composition via some form of collective-welfare metric.