Beyond GDP

Abstract:

In light of the major challenges the global community is facing today, ranging from post-pandemic recovery to the mitigation of climate change and their various social, political, and economic ramifications, traditional policy strategies that are primarily guided and assessed by their effects on productivity growth and material gain provide an insufficient framework to address the multi-faceted dimensions of these issues. It is essential to recognize that human wellbeing cannot be adequately captured by aggregate economic indicators, such as GDP, and must incorporate the lived realities of humans in their interconnected roles as economic, empowered, and social beings. By turning towards a more holistic and human-centred approach to measuring prosperity, the SAGE dashboard, developed by Dennis Snower and Katharina Lima de Miranda (2020), provides an empirical framework that embraces both the economic, social, and environmental dimensions of prosperity. It consists of four main indexes: Solidarity (S) which captures the human need for social belonging and embeddedness; Agency (A), that is the ability to influence one’s fate through one’s own efforts; Material Gain (G), measured by GDP per capita; and Environmental Sustainability (E) which may be quantified by metrics such as the Environmental Performance Index (EPI). It further differentiates between inward solidarity which covers within-group social cohesion and outward solidarity, capturing citizens’ willingness to cooperate with strangers across cultural and national boundaries. Through the inclusion of the four different SAGE indexes, the dashboard is able to align prosperity measurement more strongly with people’s social needs and purposes as well as individual empowerment against the backdrop of planetary boundaries. Drawing on several major ethical foundations including communitarianism (encompassing citizens’ social needs and purposes, such as solidarity), classical liberalism (centring on individual agency), utilitarian consequentialism as the foundation of traditional economics, and environmental ethics, the SAGE framework is built upon a few fundamental moral values which highlight the importance of normative aspects of wellbeing and serve as powerful instruments for social cooperation and generators of action.