How well is your economy? Moving beyond GDP as an indicator of success

by Scott Faulds

Since the early 20th century, the predominant method of evaluating the success of a country has been through the metric of Gross Domestic Production (GDP). This measurement is based upon the assumption that economic growth is the key indicator of a successful country.

In recent years, this assumption has been challenged, with politicians and economists, arguing that the focus on GDP has led to the development of policy which values economic growth at the expense of the wellbeing of society.

Following the 2018 OECD World Forum, Scotland, Iceland and New Zealand, have formed a group known as the Wellbeing Economy Governments, to share best practice of how to build an economic strategy that will foster societal wellbeing.  Additionally, organisations such as the OECD, European Commission and United Nations, are all conducting research into the development of policy beyond GDP. Therefore, it is clear that the previously held consensus surrounding the use of GDP has begun to break down, with countries across the world searching for different ways to evaluate the success of policy.

We must forge ahead with progressive economic policies that defy common stereotypes about costs and benefits and keep on promoting gender equality as part of a forward-looking social justice agenda

Katrín Jakobsdóttir
Prime Minister of Iceland

 

What’s wrong with GDP?

According to the International Monetary Fund (IMF), GDP is the measurement of the monetary value of all final goods and services produced within a country during a given period. However, it should be noted that this measure excludes unpaid work and the economic activity of the black market. Simon Kutzents, the modern-day creator of GDP, argued that whilst GDP was effective as a measure of productivity, it should have never been used as an indicator of the welfare of a nation.

Critics of GDP contend that the measure is overly simplistic, due to its interpretation of a successful country as one which is experiencing economic growth, arguing that some countries with growing economies have many social problems. For example, in China GDP grew by 6.6% last year whilst levels of inequality rose faster than in other countries, and society faces a great deal of political oppression. Therefore, it can be said that GDP does not provide a true picture of the success of a country, as it fails to consider societal problems, such as inequality and political freedom.  

The wellbeing approach

As a result of growing criticism of the use of GDP, several countries have started to look at alternative approaches of measuring success which considers factors beyond economic growth. This has led to international interest around the concept of wellbeing, a desire to create policy to improve the wellness of society.

This can manifest in a variety of different forms, from Scotland’s National Performance Framework to New Zealand’s Wellbeing Budget –  both policies designed to help improve the health of society rather than solely increasing economic growth.

However, this should not be interpreted as a movement away from encouraging businesses to grow; rather the Wellbeing Economy Governments believe that by improving the wellbeing of society they will indirectly stimulate sustainable economic growth.

“We need to address the societal well-being of our nation, not just the economic well-being

Jacinda Ardern
Prime Minister of New Zealand

As a result of creating a budget justified by improvements in societal wellbeing, New Zealand has invested record levels of funding into supporting the mental wellbeing of all citizens, with a special focus on under 24s. Additionally, the budget prioritises measures to reduce child poverty, reduce inequality for Māori and Pacific Islanders and enable a just transition to a sustainable and low-emissions economy. New Zealand believes that by tackling these inequalities, economic growth can be stimulated in ways that benefit all New Zealanders, where improvements in mental health alone could lead to an increase in GDP of 5%.

Therefore, whilst GDP isn’t the main priority of policy making under the wellbeing approach, it is possible for economic growth to occur as a result of implementing policy designed to improve the wellbeing of society. After all, according to the World Health Organisation, a healthier and happier society is a more productive society.

How well is well?

It is evident that the use of GDP as a measure of a country’s success has faced a great deal of criticism in recent years. However, some economists are not ready to give up on GDP quite yet. They argue that whilst GDP is not a perfect representation of a country’s success, neither is the wellbeing approach as it can be incredibly difficult to quantify societal wellness.

For example, if we compare one citizen who is in poor health and lives in an area experiencing low-levels of crime with another citizen who is healthy and lives in an area with high-levels of crime, how can we quantify which citizen has the better level of wellbeing?

In short, critics of the wellbeing approach argue that whilst it is vital that society’s wellbeing is considered during the policy-making process, basing policy solely around wellbeing is ineffective and would be incredibly difficult to measure, due to the personal nature of what constitutes wellbeing.

“Growth in GDP should not be pursued at any or all cost … the objective of economic policy should be collective well-being: how happy and healthy a population is, not just how wealthy a population is.”

Nicola Sturgeon
First Minister of Scotland

Final Thoughts

In summary, whilst there is a great deal of international interest in the possibility of a movement away from GDP, no consensus has yet formed as to whether the wellbeing approach is the way forward. With all new forms of policy, other countries often wait to see if early adopters succeed before following their lead. Perhaps it will be left up to smaller countries to prove that an economic policy focused on wellbeing can be successful.

Until then expect to see a great deal of interest in New Zealand’s implementation of the Wellbeing Budget and the results of the second meeting of the Wellbeing Economy Governments in Iceland this autumn.


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Exploring Barnahus: a Nordic approach to supporting child abuse victims

Barnahus (which literally means Children´s house) is a child-friendly, interdisciplinary and multiagency centre where different professionals work under one roof in investigating suspected child sexual abuse cases and provide appropriate support for child victims.

Learning from the Nordic countries

Barnahus has assumed a key role in the child protection and child justice systems of many Nordic countries, including Sweden and Iceland. While there are some small differences in definition of the model across these nations, the general principle remains the same: to create a one-stop-shop for services that children can access under one roof. Services range from country to country, but usually include a combination of police, criminal justice services, child and adolescent mental health practitioners, paediatric doctors and social services.

The Barnahus model involves a high level of interdisciplinary working between different teams and allows for a complete package of care and support for a child to be created to reflect their needs. Within the Barnahus centres there are normally facilities including medical rooms, interview rooms, courtrooms, and residential facilities for those young people deemed at risk and who need to be taken immediately into temporary residential care.

Evaluations of areas that use this model of intervention have found significantly better outcomes for child victims and their families because of the multidisciplinary and multi-agency approach. Some discussions have also suggested that creating an adapted model for adult victims could also be a possibility in the future.

Reducing the trauma for victims of child sexual abuse

In England, it is estimated that only 1 in 8 victims of child sexual abuse are identified by the authorities. Children who disclose that they have been sexually abused face multiple interviews in multiple settings to a number of different people, often asking them the same questions. This can be confusing and frightening, as well as traumatic for many children who have to repeatedly recount the story of their abuse. Once the interview process is over, they can also then face long waiting times to access specialist therapeutic support.

The Barnahus model seeks to reduce some of the trauma experienced by victims of child sexual abuse by making the approach child-focused, emphasising the importance of a positive, safe and supportive environment in which to be seen by specialists, give evidence and receive support. For example, within the models used in Iceland children and young people are interviewed and examined within a week of the abuse allegation being made. These interviews are all conducted and recorded in a single location with specially trained officers and medical professionals, and they are then used in court as evidence, avoiding the victim having to revisit court in order to give evidence or testify.

Inside the centre, a specially trained interviewer asks questions, while other parties watch via a video link. Any questions they have are fed through an earpiece to the interviewer. Lawyers for the accused have to put all their questions at this point.

Another benefit to the model is that children who are interviewed are then able to access immediate assistance and counselling; in the current system in England, children may face cross-examination in court months after the alleged abuse, and would have to wait for victim support therapy.

Allocation of funding from government

In 2017, in response to the success reported in the Nordic models, the UK government earmarked Police Innovation Funding of £7.15m to help establish and roll out a similar scheme in London, which would see criminal justice specialists working alongside social services, child psychologists and other services and, it is hoped, pave the way to create a UK-wide Barnahus model in the future.

Building on the existing model in London, CYP Haven, which provides largely clinical, short term care, will provide a multi-agency, long-term support and advocacy service that is expected to support over 200 children and young people each year. Criminal justice aspects of aftercare will be embedded in the service, with evidence-gathering interviews led by child psychologists on behalf of the police and social workers, and court evidence provided through video links to aid swifter justice.


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If you enjoyed this blog, you may also be interested in our other articles:

Child abuse by children: why don’t we talk about it?

Secure care in Scotland: measuring outcomes and sharing practice