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Economic growth does not produce well-being

04 July 2013

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Dr Ida Kubiszewski is a senior lecturer at Crawford School of Public Policy, and Managing Editor of the Crawford-based journal Solutions. She teaches Ecological Economics and Policy (EMDV8012).

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Over the last three decades global society has grown richer, but not better off, according to a landmark new study from Crawford School.

The study, led by Dr Ida Kubiszewski, a Senior Lecturer at Crawford School of Public Policy, compared the Genuine Progress Indicator (GPI) - which looks at financial, environmental, and social factors - to Gross Domestic Product (GDP) and a range of other indicators for 17 countries.

She found that since 1978 GDP has soared, but GPI has flatlined, barely moving over the course of three decades. The research is published in the latest issue of Ecological Economics.

“Although the global economy has tripled since 1950, global human well-being, as estimated by GPI, has been flat or decreasing since around 1978. Since 1978, we have been in a period of ‘uneconomic growth’ where the GDP economy is growing, but societal well-being is not,” Dr Kubiszewski said.

“GDP and GPI began to go in different directions when global per capita earnings hit US $6,500 per year. After that, GDP kept growing, but GPI levelled off, or even decreased.

“Interestingly, 1978 is also around the time that the human ecological footprint exceeded the Earth’s capacity to support life on it. Other global indicators, such as life satisfaction, also began to level off around this time.”

Dr Kubiszewski said that the research highlights the need for taking a more considered approach to measuring success in societies.

“The original creators of GDP never meant it to be an indicator of societal well-being and it’s a mistake to continue to use it for this purpose,” she said.

“GPI is not the perfect indicator either, but it is a much better approximation of societal welfare than GDP. More research is needed in this area, but these results make clear the importance of taking a more nuanced approach that incorporates environmental and social indicators.”

The research team included Crawford School’s Chair of Public Policy Professor Robert Costanza, along with researchers from Flinders University, University of Surrey in the UK, and Woods Hole Research Centre, Center for Sustainable Economy, and DuPont in the USA.

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