GDP and Wealth: Part 2

As we discussed in Part 1, GDP has outlived its usefulness. There are now many new, better indicators, from the Canadian Index of Wellbeing (CIW), the UN's Human Development Index (HDI), the World Bank's Wealth Index to Genuine Progress Index (GPI), Bhutan's Gross National Happiness (GNH) to the Calvert-Henderson Quality of Life Indicators. A GlobeScan survey of ten countries in November 2007, in conjunction with the Beyond GDP Conference in the European Parliament, found that large majorities in India, Russia, Germany, France, Italy, Britain, Australia, Brazil and Kenya favored broader scorecards of progress beyond money-based GDP. Indicators included health, education and environment. Real wealth and progress can never be solely quantified with money. In the financial planning profession, there are a number of planners who are having conversations about wealth and assets that are about more than money. Increasingly, there are conversations about the use of money. Leveraging debt and economic growth dependant on consumption has become evident.

The Calvert-Henderson Quality of Life Indicators, first published in 2000, are the result of an extensive six-year study by a multi-disciplinary group of practitioners and scholars from government agencies, for-profit firms and nonprofit organizations who see the need for more practical and sophisticated metrics of societal conditions. The publication of the book often referred to as the Calvert-Henderson 'technical manual,' represented the first national, comprehensive effort to redefine overall quality of life using a systems approach

Brief descriptions of the 12 Calvert-Henderson Quality of Life Indicators are as follows:

• Education Indicator summarizes the quantity, quality and distribution of education in the U.S. defined as life-long learning and contributes to the broader dialogue on who learns what, where, when and how throughout the life cycle.

• Employment Indicator describes the structure of employment in the U.S. as developed by the government and amended by private research efforts. This indicator helps clarify basic questions as to what constitutes "employment" and "unemployment" and what it means when figures fluctuate over time.

• Energy Indicator describes how much and how efficiently energy is consumed in the U.S. and provides feedback to the public on what can be done to reduce the environmental impact of energy consumption.

• Environment Indicator presents detailed information on the health of our environment with a special emphasis on the production-consumption process. A research focus on water and air quality offers data of primary interest to the general public.

• Health Indicator initiates a discussion on what constitutes "health" and examines the overall state of health of the people in America by age, race and gender.

• Human Rights Indicator examines the degree to which the Bill of Rights is protecting U.S. citizens and the level of citizen participation in the electoral process

• Income Indicator focuses on changes in the standard of living as reflected in monetary measures of family income. The indicator examines and explains trends in the level and distribution of family income and wealth along with stagnant and unequal wage growth over the past 25 years.

• Infrastructure Indicator explains the importance of the physical infrastructure to our economy and provides an example of how to supplement our national accounts with an improved asset account to monitor our physical stock.

• National Security Indicator explains the process our nation takes to achieve a state of national military security beginning with the President's National Security Strategy through the Congressional Budget Process. This includes both a diplomatic strategy and a military strategy, all of which are affected by public opinion and the perceived threat to security.

• Public Safety Indicator examines how effectively our society promotes private and public safety when faced with complex interrelationships between personal decisions, public actions, risks and hazards in the environment that result in deaths from injuries.

• Re-creation Indicator provides a novel approach to identifying the myriad ways that Americans chose to re-create the self, to be revitalized in body and mind and to reestablish social contacts through leisure and/or recreational activities.

• Shelter Indicator explores the type of housing Americans have access to, the level of affordability of that housing and how housing in turn affects broader social outcomes.

In sum, each quality of life indicator includes a unique conceptual model, a set of national statistical trends and analysis to bring the reader up to speed on the subject. The intent is that the indicators serve as sophisticated primers on the respective topics. It is not an attempt to unify the information or devise a new theory to measure or explain how society is doing overall.

A great example of this is the Health Indicator of the model. Health has been defined by the World Health Organization as "a state of complete physical, mental and social well-being." It thus transcends the absence of death, disease and disability, and incorporates concepts of well-being and quality of life; measures of health must likewise transcend mortality and morbidity. However, health does not exist in isolation, but rather it is the product of the interaction of our natural and built physical environments, socio-economic status, psycho-social conditions and cultural norms and beliefs with our physiological and psychological selves and our genetic inheritance.

Part 3 will dive deeper into the Calvert-Henderson Health Indicator.

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