Wanted: A new definition for prosperity

What really is prosperity? How do we measure it, today and in future, and how do we ensure that we are economically prepared for the future? These are the questions we explore in this and the following articles. 
 

Let's start with the most important question: What is prosperity? Most of us would agree that everyone has their own thoughts about this. If we asked a hundred people around the world, we would get a hundred different answers, ranging from a hot meal to a room of one's own to a villa by the sea. To others, prosperity is not a material thing but, for example, the luxury of disposing of one's own time freely. Many believe that we are a spoiled, affluent society that will not compromise on anything, while others look at our rapidly changing world and see nothing but sacrifices, afraid of losing what they have. 

Prosperity, then, is very subjective – which is not particularly useful for businesses and politicians. And that is why Western industrialised nations have used a simple metric ever since the 1940s: our prosperity is our gross domestic product (GDP). It quantifies the value of all goods and services generated in a country within a year and, as such, represents the full economic capacity of a country in a single figure. For decades, economists and politicians have concluded: if our economy is doing well, our citizens are doing well, too. 
Obviously. 

Or are they?

Of course, it's not that simple. And it was never meant to be. Prosperity, after all, is not just a number. We are not the first to realise this: criticism of the GDP is almost as old as the GDP itself. Robert F. Kennedy said in a speech in 1968: “It measures everything in short, except that which makes life worthwhile.”

The concept of the GDP has shortcomings. When a natural disaster occurs, the subsequent reconstruction work is recorded as growth and, as such, a gain in prosperity. The loss of infrastructure, the trauma of those affected? They are not a factor in the GDP. 

Care work? Not a factor. Work-life balance? Nope. Environmental problems such as climate change, loss of biodiversity, and pollution grow along with the GDP, but they are not priced into it. 

Even since before the climate crisis, people have been coming up with initiatives and indices that measure prosperity in terms of other factors, for example, health, well-being, education and life satisfaction. Here is an overview of the most important approaches: 
 

• The United Nations Development Programme's Human Development Index (HDI) evaluates the level of human development in a country. Its indicators are health, education and standard of living.
   
• It is complemented by the Planetary pressures-adjusted Human Development Index (PHDI), which includes an ecological component, i.e., a country's carbon dioxide emissions and per-capita ecological footprint. 
   
• The Better Life Index (BLI), which the OECD has compiled since 2011, is weighted according to eleven indicators: work, education, income, health, life satisfaction, participation in democratic processes, security, social cohesion, environment, housing and work-life balance. 
   
• The Happy Planet Index (HPI) measures how happily and sustainably a country's inhabitants live. It looks at three factors: subjective well-being, average life expectancy and sustainability as measured by the ecological footprint. 
   

So alternatives do exist. And people are using them:rankings of the happiest countries are regularly published, and researchers are getting better and better at identifying people's needs all over the world. However, the results are yet to influence concrete political decisions – and that is the goal. 
This does not mean that the GDP must be abolished completely, as even UN Secretary-General António Guterres agrees. But it should no longer be the only benchmark for answering the question: what is a good life - for everyone?

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