The planet as a basis for a new indicator of well-being

/ Author: Masja de Ree
Portrait of Rutger Hoekstra in connection with the publication of the book Replacing GDP by 2030.
© Sjoerd van der Hucht Fotografie
The figure used to measure our economy – gross domestic product (GDP) – is a very important yardstick. But it is not a measure for well-being, sustainability and inequality in society. How can we change this? Former Statistics Netherlands (CBS) researcher Rutger Hoekstra analysed the success of GDP and investigated how we could arrive at a new indicator of well-being. Hoekstra’s book ‘Replacing GDP by 2030’ was published in May.

GDP as a multinational

GDP is the total monetary value of all the goods and services produced within a country in a year. Hoekstra: ‘Scientists have been arguing for 50 years that GDP does not say enough about the well-being of a country in a broad sense – you also need to know something about the state of the environment, the quality of life, the way in which money and happiness are distributed across the population, etc. Hundreds of alternative measurement systems have been proposed, but in spite of this, little has changed over the last 50 years.’ According to Hoekstra, this is because research on sustainability and well-being is too fragmented. ‘We do not cooperate enough and fail to broadcast our message strongly enough.’ Hoekstra sees GDP as a multinational. Economists have done sterling work in creating a figure and policy models that help to solve economic problems. Furthermore, fantastic logistics have been employed, so that GDP is published in more than 200 countries. ‘GDP has influenced our language use and our thinking. Thanks to GDP, words such as “economy”, “consumption” and “productivity” have become commonplace.’

Learning from economists

Hoekstra does not reproach the economists for anything – on the contrary. ‘We can learn from them. We must build an equally powerful multinational. Such a multinational does not consist only of an indicator, but also includes an accounting system and policy science. ‘The system of national accounts of GDP is a binding agent and acts as a dictionary for macro economists: you can interpret the economy in different ways, but you do understand each other. Because you speak the same language. That is what we can learn from the GDP multinational. Such a dictionary is completely lacking in the world of well-being and sustainability. Key terms have no clear and unambiguous definitions, which is the cause of considerable confusion among researchers and citizens.’

Greater whole

The crux of the matter is therefore to create an accounting system that functions as a language. But what exactly? And how? Hoekstra argues that it should be based not on the economy, but on the Earth: nature, the climate and raw materials. Within that system of nature-based accounts, you have the social accounts and these in turn include the economic accounts. Hoekstra: ‘This is a new approach. Until now, the economy has always been the central system. And the economy is supremely important, but it is part of a much larger whole: our planet and our society.’

The basis should not be the economy, but rather the Earth: nature, the climate and raw materials.

Monitor of Well-being

CBS has published the ‘Monitor of Well-being’ for a number of years. Hoekstra was involved in its predecessor, the Sustainability Monitor for the Netherlands. ‘My proposal is based on the internal framework of the Monitor of Well-being. The difference is that the Monitor still consists of separate indicators. In my book I present a consistent system of accounts.’ Within this system, various different indicators are weighted and combined to produce indicators for sustainability and well-being. Hoekstra: ‘For this purpose, I propose using various weighting methods. Allocating monetary values to aspects of well-being is just one way of doing this. As regards the weighting methods, for example, I also consider new scientific movements such as behavioural economics.’

Community

Hoekstra is taking the first step towards a basic system of accounts – a system similar to the national accounts. This system is multidisciplinary and it is headed not by the economists, but rather by a network of scientists that includes demographers, sociologists, political scientists, ecologists and climatologists. This does not make the accounts system for well-being and sustainability complete. ‘It’s an outline. In order to make headway, a community needs to emerge which wants to embark on such a project.’ Hoekstra is currently in discussions with the United Nations (UN), in the hopes that this major organisation will back his idea. ‘History teaches us that the UN can put something on the map worldwide. But this requires momentum. With my book, I hope to spark a discussion.’

Public debate

If Hoekstra achieves his aims, in 10 years the world will be working with a new yardstick for well-being and sustainability. What could it deliver? ‘I am convinced that the public debate would then focus more on sustainability, well-being and inequality, and that there would be a greater emphasis on the problems associated with those topics. The public would gain confidence in the indicators and journalists would await the new figures with eager anticipation when they are published four times a year, just like they do for the GDP figures now. In policy and in society, attention would shift to what is really important: a good life for us and for our children and grandchildren.’

CV of Rutger Hoekstra
Rutger Hoekstra worked as a researcher at CBS from 2004 to 2018. Together with others, he was involved in drawing up the Sustainability Monitor for the Netherlands, which preceded the Monitor of Well-being. He is currently an independent consultant and works for the World Bank and the United Nations, among others.

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