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August 9, 2012

Moving beyond Growth to Measure Wellbeing


In a recent post, I discussed the idea that economic growth alone cannot eradicate poverty in a developed nation.  But, you may be asking, if we do not measure progress through increases in Gross Domestic Product (GDP) then how will we know if we are making progress? 

There are actually a number of indicators of well-being that have been developed over the years to measure changes in overall well-being. Perhaps the newest and closest to home is the Canadian Index of Wellbeing (CIW).  Based out of the University of Waterloo, the CIW measures our well-being in 8 different categories, including how we treat the environment, our living standards, opportunities for leisure and culture, how we use our time, our health, our education and even our democratic engagement and the overall vitality of our communities. 

Far more than a measure of average living standards, the CIW measures our quality of life.  Average income is certainly a part of this, but just as important is environmental protection and how much time we have to simply have fun and engage with our friends and neighbours outside of work.  If you ask me, this is a far more comprehensive and relevant measure of our wellbeing than whether or not GDP has increased.   


According to the CIW, GDP has increased by 31% since 1994, but the average wellbeing of Canadians has increased by only 11%.  Yes, average incomes have increased, but the average person spends a lot more time working in order to make that income, which means we have less time to take in cultural events or to simply relax and de-stress.

The graphic above shows that though the overall contribution that health makes to our well-being has improved, there has been a decrease in the average number of years one can expect to be healthy.  For example, instances of depression and self-reported of diabetes are on the rise.  In other words, our life expectancy has increased, but the quality of life we can expect throughout our lifetime may have decreased. 

As a country, we are more than an economy; we are a society that creates well-being in many different facets.  We need more than income to be successful and prosperous.  We need communities that are thriving, we need time to relax.  We need healthy lifestyles and a healthy environment.  We need increased connectedness and less stress. 

The CIW can help us to measure how our society is fairing.  The index enhances our ability to recognize where the benefits of economic growth are really going and highlights areas where there is room for improvement.  It also highlights the trade-offs that our society has made in order to have economic growth.  Yes, our economy has more money and the living standards of some have increased, but most of us have less time for leisure and cultural activities.  Furthermore, we may be living longer, but we are also more stressed, less healthy and have far more time constraints than we did in the past.

By focusing solely on the level of economic growth, with no attention to how our historic economic growth is being used and allocated, the benefits of that growth are slipping through our fingers.  The CIW helps us to look at our lives beyond our bank accounts and to take stock of what we are working so hard for.  Growth is great, but we need to make sure that the trade-offs are worth it and do our best to minimize the negative effects of growth.

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