Fairfax launches The Wellbeing Index

In a time of increasing economic conservatism within our media, it is exciting to see a major media company, Fairfax, launching a new economic indicator that offers an alternative to our obsession with GDP. As the Herald's Ross Gittins and the indices architect Nicholas Gruen both point out, GDP is a great indicator as to employment growth and the amount of cash going into people's pockets. But that's all. As a society are we really that concerned with GDP regardless of where the money is going? If most of the growth ends up in the pockets of the top 1%, how does that benefit broader society?

The Herald-Lateral Economics Wellbeing Index takes a broader look at the economy. It starts with GDP which Gruen claims" correlates surprisingly well, though not perfectly, with many of the most important aspects of well-being such as education, environment, social and political cohesion, and health." We then adjust GDP for factors - both economic and non-economic." The index then factors in physical, environmental and human capital adjusting for"changes in health, inequality and job satisfaction to provide a better measure of national wellbeing than traditional economic measures."

Ross Gittins provides a succinct overiew in the article

There's so much more to wealth than money

Read more: http://www.smh.com.au/opinion/society-and-culture/theres-so-much-mo...

But what is worth considering is this is a weighted index. Gruen admits this method is imperfect, the question is how imperfect? Should we trust the weightings? No doubt there will be debate, and one hopes this can be refined in a transparent way. With sufficient transparency, maybe this will catch on, and the media might start reporting on our National Wellbeing rather than being fixated on very narrow economic indicators. One can only hope.

What do you think about the National Wellbeing Index? I'd love to see your comments.

Read more: http://www.smh.com.au/business/wellbeing-index-at-a-glance-20111207...

Read more: http://www.smh.com.au/business/putting-a-figure-on-social-progress-...