Robert F. Kennedy said on the presidential campaign trail in 1968, “Our gross national product…counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl….Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play”.
Per the latest article in HBR, GDP can’t distinguish between economic activities that create increase a nation’s wealth and ones that eat into its natural endowments (cutting redwoods), result in sickness and future cleanup costs (pollution), or merely ameliorate disasters whose costs are never accounted for (ambulances). Measuring the sustainability (environmental or otherwise) of economic growth requires making estimates, of course.
This brings me to measurement that has been around since 1990’s – Human Development Index (HDI), which according to economist, Amartya Sen, better represents capabilities versus commodities (GDP). The HDI is a combination of three indicators – Life expectancy, educational attainment, and income. United States’ HDI is 0.910, which is a rank of 4 out of 187 countries with comparable data. The HDI of OECD as a region increased from 0.749 in 1980 to 0.873 today, placing United States above the regional average.
- US is #10 on Legatum Institute’s Prosperity Index
- US is 7.1 on Transparency International’s Corruption Perception Index
- US is #10 on Heritage Foundation’s Index of Economic Freedom
If US is 0.910 on Human Development Index (HDI), #10 on Legatum Institute’s Prosperity Index, #10 on Heritage Foundation’s Index of Economic Freedom, and 7.1 (very clean is between 9.0-10.0) on Transparency International’s Corruption Perception Index; why is it #31 on Poverty Index? Housing, Income, Jobs, Community, Education, Environment, Governance, Health, Life Satisfaction, Safety, and Work-Life Balance are 11 topics that OECD has identified as essential, in the areas of material living condition and quality of life.
The HDI trends tell an important story both at the national and regional level and highlight the very large gaps in well-being and life chances that continue to divide our interconnected world.