A new report compiled by Boston Global Consulting Group (BCG), titled ‘Towards A Broader View of National Performance’, prepared in collaboration with the 2019 World Government Summit, shines light on the need to go beyond the widely-used Gross Domestic Product (GDP) metric as a sole indicator of societal well-being and economic performance.
Highlighting the need for indicators that better capture the dynamics of a complex world, the report puts forth a three-fold dashboard solution encompassing Objective well-being, Subjective well-being, in addition to Economics (GDP/Gross Domestic Income). These three indicators together assess economic value generation, individual perceptions of well-being and national outcomes and characteristics that affect well-being.
The report includes an assessment of income and happiness dynamics. The data shows that the UAE has managed to increase happiness. The UAE is placed above markets such as the USA, Canada, Belgium and France in terms of the happiness indicator. This is a strong reflection of the nation’s efforts and investments to improve people’s happiness, albeit slower economic growth during the period.
“As an advocate for enhancing lives across the world, we are proud to be part of conversations that help to shape government agendas which reflect a drive towards achieving societal well-being – an area that the UAE leadership continues to lead the world in through its happiness agenda,” said Dr. Leila Hoteit, Partner and Managing Director at Boston Consulting Group Middle East. “To encourage further thought-leadership, this research draws upon BCG’s experience working with country and regional leaders on national strategies and from the work on the objective measure of well-being used in BCG’s Sustainable Economic Development Assessment (SEDA).”
Towards a three-fold view of national performance
While GDP is the most common national performance metric, its narrow scope bypasses critical societal factors, including education, health and the distribution of wealth. By incorporating well-being metrics to complement GDP, the policies of government can be tuned to monitor socioeconomic dynamics, providing an early warning system to trigger course corrections.
The lens of Subjective well-being, often referred to as ‘happiness’ metrics, has seen a slow uptake from global policy makers and does not show a direct correlation with GDP. However, these metrics provide opportunities for future policy design, policy monitoring and policy assessment to leverage insights related to the human welfare of the societies we live in.
Secondly, Objective well-being brings about a requisite need for relative measures and benchmarks. To bring this to a global stage, BCG’s SEDA – a fact-based diagnostic tool to assess the relative well-being of countries based on ten dimensions including governance, health, and education – addresses this need with quasi-objective data to measure progress and well-being.
Lastly, the addition of the above measures aligned with Economic metrics, such as GDP and GDI, completes the ‘Beyond GDP’ three-fold dashboard for viewing performance. This proposed solution provides adequate attention to all three elements as well as a platform to view and flag any divergence from policy directives.
While the emergence of methods to modify GDP indicators are nothing new, BCG’s proposal for a three-fold view of national performance to generate a “beyond GDP” perspective is designed to establish a high-level dashboard to track progress on well-being and prompt policy-making and government actions to reflect a broader purpose focusing on the overall citizen experience.