The Happy Planet Index measures what matters

The Gross Domestic Product measures money, but there is more to life.

In the 107 comments to a recent controversial post, I suggested that perhaps the Gross Domestic Product (GDP) is not the best measure of what matters in life. I am not the first to say this; Even Simon Kuznets, who developed it, wrote in 1934: “The welfare of a nation can scarcely be inferred from a measure of national income.” Bobby Kennedy said in a 1968 speech:

“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… It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country; it measures everything in short, except that which makes life worthwhile.”

My commenter asked, “WHAT IS THE ALTERNATIVE?” Consider the Happy Planet Index (HPI), just issued for 2024 from the Hot or Cool Institute. The HPI authors (who include Lewis Akenji, who I often quote for his work on 1.5-degree lifestyles and whom I acknowledge in my new book) are not crazy about GDP either, noting:

“Countries that seek to maximize GDP do not, as a rule, do particularly well at achieving what matters: well-being within environmental limits. In that sense, GDP does not measure what matters.”

The HPI is straightforward. Research has shown that most people around the world value health and happiness more than anything else. So, it multiplies life expectancy (a proxy for health) by self-reported well-being from surveys and divides it by “the environmental cost associated with a country’s well-being, in the form of its carbon footprint.” It basically measures wellbeing per tonne of carbon emissions. (Full methodology here) It was created in 2006 but is now managed by the Hot or Cool Institute.

The authors make it very clear that this is NOT a replacement for GDP.

“Economists should not create models to determine the policies that would maximise the HPI with disregard for other variables. We do not think that any single indicator should ever have as much power as GDP has had over the last 80 years. Rather, the HPI is intended to open up the conversation about measuring progress and highlight just how badly GDP has misled us.”

The country with the highest HPI score is Vanuatu, which scores relatively high on wellbeing with a low carbon footprint per capita. Sweden is in second place, with high life expectancy, high wellbeing, and a carbon footprint per capita half that of the USA. Costa Rica always scores high on HPI, but this year is beaten by El Salvador of all places, where people are evidently happier because the President has cut the murder rate from among the highest in the world to 1/5 of what it was by throwing 2% of the population into prison. Or maybe they liked his proposed volcano-powered Bitcoin city. It’s a strange result, and the authors admit that “It is important not to get carried away in celebrating the countries that score the best on the HPI.”

The HPI report helpfully offers a graph plotting HPI against GDP, which probably explains why I have so many friends who are retiring to Ireland. I thought Ireland’s GDP seemed out of whack, but other sources confirm it. I was surprised that the UK has such a high HPI compared to Canada; It sure didn’t seem very happy or healthy to me when I was there recently. But using our carbon footprint as the denominator is definitely going to drag Canada down. Like the USA, it is big, and everyone drives, whereas the UK is small and gets much of its power from wind and wood pellets.

The three main findings of the 2024 Happy Planet Index, lightly edited:

• Good lives don’t have to cost the Earth. There is a relationship between carbon footprint and adjusted happy life years, but it is non-linear and relatively loose.

• GDP does not measure what matters. Of the ten countries with the highest per capita GDP, six have below average HPI scores. In other words, pursuing ever higher GDP does not lead to what really matters: wellbeing within environmental limits. In many wealthy nations, high levels of consumption and production are contributing to ecological collapse without providing proportional health or happiness for their citizens.

• Inequality is a bad deal for the planet, and for countries. In all except one of the countries we analysed, the richest 10% have a considerably lower HPI score than their fellow citizens. Their much higher carbon emissions do not translate into higher wellbeing. Overconsumption on the part of the rich is not only bad for the planet, but also a waste.

The study looked at a few countries in detail and unsurprisingly found that the richest 10% of the population had a much higher carbon footprint, but surprisingly, it didn’t make them significantly happier or their lives significantly longer. “In the 15 countries we analyzed, the HPI scores of the top 10% were way below the average in all but one country. This should embolden political actors to tackle inequality and, particularly, overconsumption. In most countries, the richest are bringing average sustainable wellbeing down.”

As the authors note, we shouldn’t get carried away here. “HPI should not replace existing metrics, but instead encourage countries to democratically adopt alternative measures of progress,” says Dr. Saamah Abdallah, Programme Lead Sustainable Wellbeing at the Hot or Cool Institute. “Citizens should take the lead in defining what matters and what should be measured.”

HPI addresses a real problem: everybody loves economic growth and a growing GDP. But “GDP growth is a particularly problematic single-minded goal because it seems to almost be inextricably linked with the very thing we need to be reducing now: environmental damage.” The authors never use the radioactive D-word (degrowth), but they do quote prominent degrowthers tilting at windmills and green growth: “There is no empirical evidence supporting the existence of a decoupling of economic growth from environmental pressure on anywhere near the scale needed.” (See where I write that dissing degrowth has become a growth industry.)

But there are other things in life; last word to the authors of the Happy Planet Index:

We do not want to pretend that changing how we measure progress will lead to a new economic system on its own. Of course, it will not, and political scientists have warned against being naïve about this. Nevertheless, new indicators of progress are needed if we are to transition to a system which is not dependent on economic growth to achieve social outcomes. They can help inspire both the public and politicians to embrace that new system. And, if we come together as societies to decide what these indicators should be, they can contribute to a new common sense of purpose and greater democratic energy.

It’s time to talk about what matters to us.