 Hi, my name is Robert Costanza. I'm a professor at the Crawford School of Public Policy at the Australian National University. I'm joined here in the studio today by two of my colleagues. To my left is Aida Kubiszewski. She is an associate professor also at the Crawford School of Public Policy. And to her left is Lorenzo Fieromonte, who is the director of the Center for Governance Innovation at the University of Pretoria in South Africa. Today we're going to talk about well-being. What does that mean? How do we assess well-being at the community level, at the state level, at the national level, at the global level? There's been, I think, a major change in the world around this issue. The UN recently, all of the UN member states signed onto the Sustainable Development Goals. There are 17 goals now. These are intended to apply to all countries in the world, not just developing countries. And they're much broader in their intention than simply maximizing the rate of economic growth or GDP. They cover poverty, they cover education, they cover protecting the marine environment and the at rest of the environment, they cover dealing urgently with climate change. And these goals, I think, are intended to drive development in a very different direction. One problem with the goals is they are all presented as independent goals. There are 17 of them. But we know that there are very clear trade-offs and synergies between these goals. But they all contribute in various complex ways to the overall sustainable well-being of people on planet Earth. So the three of us, along with some other co-authors, have recently published a paper in the journal Ecological Economics that takes a look at how we can begin to build a set of indicators that really do look at our sustainable well-being of people on Earth. What would we need to do that? So before we get into that, I think we're first going to talk a little bit about why we need to make these changes. Why is this so important right now? And one of the big problems is that since at least the end of World War II, we have relied globally on GDP growth as a proxy for improving societal well-being. And it's well known, even by the creators of GDP, that it was never designed as a measure of societal well-being. It's a very specific measure of market activity in the economy. So I'm going to first ask my colleague Lorenzo, who's written a book recently called Gross National Problem, that deals with all the reasons why GDP is no longer an adequate goal for our national policies. Even though it's been consistently used, and it's probably the most well-used index of progress around the world. So I'm going to have him talk a little bit about why that needs to change. What are the problems? What is the Gross National Problem, Lorenzo? Thanks Bob. I mean, it sounds paradoxical, but basically for the past 80 years, the whole world was set on a certain track to increase development and prosperity according to a model that, even as you said, the creators had warned against using it in policy, especially in normal times. Invented before the Second World War, and to deal with the crisis, it was never meant to be used as an indicator of success in normal conditions. And there are many reasons for this. GDP is a measure of material consumption within the formal economy. It doesn't consider the many things that actually create utility, and welfare, let alone well-being. Chopping trees increases GDP, but raising them doesn't. Making people stay healthy doesn't increase GDP, but actually sicknesses and diseases do that. Every time we take out an insurance against crime, against the natural disaster, and all of that, we increase GDP, although we know that's an expense that no reasonable person would like to have in normal conditions. So societies that somehow develop in a way which is sustainable and equitable tend to be seen by GDP as less progressive, as less developed, as less prosperous. And this has created a whole rat race towards the wrong objectives. And 80 years later, we have finally come to terms with this reality, and now we're trying to scramble to find another way of measuring success and devise policies accordingly. I like what you said in your book as well about that GDP was really helpful to win World War II. And so as a tool for understanding production in that sense of war material and that sort of thing. Absolutely. It was essential, and probably helped win the war. But those days are gone, and now when we replace old hard-line telephones with cell phones that are cheaper and have more benefits, but they may cost less, and therefore GDP goes down. So it's really become a very poor proxy. Absolutely. For well-being. And there are alternatives that are out there. And there's been a lot of research, I think, over the years that hasn't yet managed to budge GDP, but I know Ida has worked on one in particular called the Genuine Progress Indicator. So why don't you say a bit about that and how that's better than GDP? Thanks, Bob. So there's actually hundreds, if not thousands, of different alternative well-being measures to GDP. They're mostly characterized in three groups. One is where it takes GDP and adjusts it in some way, and the Genuine Progress Indicator, which I'll talk about in a second, is one of those. But there's also ones that look at well-being or life satisfaction directly. So through surveys, for example, subjective well-being, where it asks people how satisfied are you with your life, whether it's different components or life overall. And there's a third kind of indicator where it combines various different indicators. So you might look at crime or health or subjective well-being and put it all together into one indicator. So for example, the Genuine Progress Indicator starts with a large component of GDP, personal consumption, and adjusts that for inequality for various costs that are, as Lorenzo said, currently seen as benefits. So if we have a natural disaster, GDP goes up, it's considered benefit, but it's really a cost to society in many ways. But then it also adds certain things that are benefits in society, but are not counted. So volunteer work, household work, moms staying at home to take care of kids, not counted in GDP, but those are important components of our society. And it does increase well-being. So for example, if somebody has a garden in the backyard and decides to pick the vegetables from the garden and have a salad for dinner versus going and buying a TV dinner, that doesn't raise GDP, but it's much healthier for you often. And so components like that are not considered in GDP, but are often considered in some of these well-being indicators. And in 2013, a group of us published a paper that looked at Genuine Progress Indicator and what it's been doing for 17 countries. And there's about 25 countries that have now calculated it. And what we found was that in early on, GDP and GPI do go up together as the basic needs need to be fulfilled. But then GPI levels off or even decreases while GDP keeps growing. And a lot of that difference is due to environmental costs. So like Lorenzo said, natural disasters or oil spills or air pollution, water pollution, any of those, which are actually decreasing well-being of society are increasing GDP. So environmental costs. And the other one is the cost of inequality. And there's been a lot of work done by, for example, Kate Pickett and Richard Wilkinson. They wrote a book called The Spirit Level, which shows that there's considerable basically decrements to society as inequalities go up, as an equality between countries and within countries. So health goes down, education levels go down. And there's a lot of indicators that do go down as equality goes up. And so GPI, we found that no matter what society we looked at, some that GPI leveled off or decreased a little bit later. So if China was around 1995, while US around 1978, when we put all that together, all those countries globally, we found the same trend. And around 1980, GDP kept going up, GPI leveled off and decreased or decreased. We also found that a lot of the other well-being indicators did about the same thing. Around that time started leveling off or going down while GDP kept growing. And I know there are a couple of states in the United States that have adopted GPI as one of their official indicators. Yes. So Maryland was the first one to adopt it about five, six years ago. Maryland was the first state, first government to officially adopt an alternative indicator adopted the GPI during progress indicator and have measured it since then. Since then, the state of Vermont has also done it. And then other states, quite a few other states in the US have been looking into, including Oregon, Washington, Utah, Hawaii, and a few others. No country government has yet adopted it. So Bhutan, for example, has GNH, the Gross National Happiness Indicator, which is a subjective indicator. So it basically is a big survey asking people about their life satisfaction. So it works a little differently. But those two states are the only two governments that have actually adopted a different indicator. And so what seems to be missing, though, from GPI is at least two of the main things are the positive contributions of natural ecosystems, ecosystem services and natural capital, the cost are included of air pollution, water pollution, etc. But not the benefits. And likewise, not the benefits of having a good community and having good social capital and good relationships. And those things are also degrading. Those contributions are degrading. And so we're not picking that up when we just talk about the GDP. In the paper that we published recently, we talked about how to integrate some of these different elements. How would we add on the positive contributions? How would we integrate the subjective well-being indicators with the more objective indicators? Because people don't perceive all the benefits that they get. But it's certainly important to recognize and survey what people do perceive as benefits. And certainly there's social interactions and many other things or things that they perceive as benefits. And they also perceive that they're not getting better, that their well-being has been declining. Growth in GDP has been going to the 1% of the population, not to everyone. So just for that reason alone, the distribution of incomes has been going down. So how do we then move beyond even GPI or GPI 2.0? What's the appropriate measures that need to be developed? Nivea Lorenzo, you want to take that one? No, I think what you said is completely right. GPI was a way of correcting GDP by realizing something that, again, as I said for 80 years we haven't realized, is that there are many negatives in GDP. No reasonable society would want them to increase. And yet we see them as bonuses when the economy grows. And so GPI sort of orders the house, it's a bit of a housekeeping device. Like ordering things in the house and saying certain things are not positive, they should go down, other things should go up. But it doesn't include things that were initially never considered as part of the economy, as you said, natural capital, natural ecosystems and so on and so forth. Now we do have a lot of studies, we have a lot of tools that can help us do that. For as long as we don't do that, our natural system and social systems will be seen by politicians as being of no consequence to development and prosperity. And when things are of no consequence, chances are that policies will be designed either to neglect them or to destroy them, which is what has been happening for many years. So we need to do that and we need to move away probably from a simple correction of GDP to a totally new system. The system which is in line with the aspirations of contemporary societies. As you said, GDP is not only wrong because of the many things that's measures in a very inefficient way, but also because it sees increasing costs as a sign of development. But now we know the new technologies are actually lowering costs by increasing consumer surplus. So the benefits that we receive every time I call my mom on WhatsApp, it's for free, but it's of a better quality than 10, 20 years ago when I used to call her on the phone. And the same applies to technological advancements in many technologies. We know that the digital surplus in many economies these days is far beyond conventional industrial production. So our economies are growing because of Google, WhatsApp, Airbnb, Facebook, less and less because of the BMW, Chrysler and so on and so forth. So we do need a system of data gathering which is in line with the new economies that we have. That includes natural systems, social systems and our innovative capacities that are totally neglected by GDP. So this is not only important for ecologists and for social scientists. I think it'd be important for the digital industry, the new innovators in the Silicon Valley, all those young entrepreneurs that really like to build an economy which is much more light than the conventional one, but much heavier on well-being and prosperity. Yeah, our data collection abilities are so much better than when GDP was first designed, where basically you had to do things on hand calculators, mechanical calculators even. And even today, a lot of the data that goes into GDP is from paper surveys that are sent around to businesses. You won't believe that. Most statistical agencies still collect quarterly data on GDP by faxes. They still are probably the only ones in the world still using fax machines. And our ability to understand those complex interconnections as well. I mean, underlying GDP is the system of national accounts, which is a very linear system, input-output tables of the economy, very aggregated, very static. And we can do a lot better than that these days because we understand the dynamics of complex systems much more. We can look at stocks and flows and how they interact. And we can use that sort of modeling to not only look in the past, but also to project into the future under different scenarios. I think it's becoming critical these days. So yeah, there's a huge need to make these kinds of changes. And I think the sustainable development goals process is certainly pushing that agenda. And I think at least we are confident that some major changes will be in the cards coming forward. So maybe we'll end it there. As I said, we did produce a paper, a journal article for ecological economics just recently. This came out just last year that's titled, Modeling and Measuring Sustainable Well-Being in Connection with the UN Sustainable Development Goals. Cover some of the topics that we've been talking about. But if you want to learn more about that. And we've also published other background material on many of these problems. And so I hope this was informative. And I hope that we as a society can shift our societal goals quickly to measuring well-being in the broad sense that we've been talking about in order to move our societies to a more desirable and sustainable future. Thank you.