Daily Lessons from Life 14 September 2010 - Going beyond GDP to measure progress

Going beyond GDP to measure progress - September 14, 2010: The Business Times

"In 2007, the European Commission and European Parliament, along with the Organisation for Economic Cooperation and Development, the World Wildlife Fund and the Club of Rome, started a 'Beyond GDP' campaign to look into new ways to calculate economic output and track progress.

Their September 2009 report suggested, among other things, the creation of quality-of-life and well-being indices, as well as indicators on environmental sustainability to measure the full effects of pollution, and an inequality metric that takes into account various social disparities in everyday living. All in the name of an 'international initiative' to measure the 'true wealth and well-being' of nations."

It is interesting to note that the world, at least some part of it, has been looking for some measurement of the wealth and well being of a nation beyond the mere GDP indicator we are so obsessed with since 2007 or earlier!

Lessons for me are:

1. one study mentioned a collection of 300 over indicators to measure the wealth and well being of a nation. This may be overwhelming but yet measuring wealth can be easy and single dimensional while measuring well being surely need to encompass a lot more variables. Some of which are intangible that need to be translated into tangible or quantifiable manner. There lies the argument of the cost and benefit analysis. Does the cost of translating them into quantifiable data justifiable?;

2. when nation pursue GDP growth with intense focus and single-mindedness, it can be dangerous as longer term challenges and need a longer term solution and hence a much longer gestation period to show returns on investment or progress may be sacrificed or deemed unworthy of the efforts! The nation's report card has to be a lot more comprehensive. Also, it is NOT to compare but to allow each nation to assess how they are doing and make continuous improvement efforts;

3. some how I believed that it is even more important for the currently developing nations to embrace the 'new' measurement of wealth and well being than the developed ones. Reasons being: they can avoid the short-sightedness of pure economic measurement. I have seen far too many corporations' smart and ambitious executives sacrificing long term benefits for short term gains!! That is how ONLY focusing on GDP growth is like at the national level!!

The road ahead is long. While collectively the world may not be ready to accept one universal set of 'new' wealth and well being measurement system, it is important that each nation adapt what each knows are those that measure long term wealth and well being that really matters!