Module 2: Why a wellbeing economy?
Addicted to economic growth
Over the last decades, we’ve come to associate societal progress with ever-rising economic growth. As the OECD explains, GDP is frequently used as synonymous with societal progress, regardless of the fact that GDP was never intended to play this role [1] [2]. GDP growth does not always serve social and environmental wellbeing goals well, particularly when it does not distinguish between economic activities that enhance or diminish wellbeing. This is widely recognised as one of the main flaws of GDP.
Kate Raworth describes how we have become financially, politically and socially addicted to economic growth:
Financially, because today’s financial systems are designed to pursue the highest rate of monetary return, putting businesses under constant pressure to deliver growing sales, growing market shares and growing profits.
Politically, because politicians want to raise tax revenue without raising taxes - with GDP growth seen as the best way to do this - and are concerned that if their economy stops growing while other economies keep growing, this will disadvantage their domestic wellbeing.
Socially, because decades of marketing and consumerism have made us believe that we can transform ourselves and make our lives better by buying something new.
Click on the card to read more about how GDP is commonly used in public policy:
References
[1] OECD (2020), Beyond Growth: Towards a New Economic Approach, New Approaches to Economic Challenges. Paris: OECD Publishing, https://doi.org/10.1787/33a25ba3-en.
[2] Exton, C. & Shinwell, M. (2018). Policy use of well-being metrics: Describing countries’ experiences. OECD Statistics Working Papers, No.. 2018/07, Paris: OECD Publishing.