The big ideas: A Wellbeing Economy

Published: 19 May 2023

Redefining the goals and expectations of politics, businesses, and society, means that countries can transform traditional economies - focused on economic growth - into those that build and sustain a healthy and prosperous world.

The current economic system is failing to respond to the needs of the global population and the planetary ecosystem. There is a widening disconnect between people, economy and environment. Our current measures for human and economic development revolve around GDP, an outdated concept that emerged in the mid 20th century. In today’s globalised world, it’s clear that the GDP metric is too narrow for our current economic predicament.

The history of GDP highlights how it has lost its relevance. Developed during the second world war as a way of measuring pure economic and industrial output, GDP ignores a lot of the key pillars essential to a sustainable healthy society. These include environmental impact, unpaid labour, the sustainability of a countries’ growth and income inequality to name just a few. The prioritisation of GDP has created an illusion that we just need to grow the economic pie to solve our problems.

In response to the limitations of GDP several models and alternatives have been proposed, including doughnut economics, degrowth and the Wellbeing Wconomy. This article introduces the latter and gives examples of the Wellbeing Economy in practice.

To become a genuinely sustainable and healthy society, we need to rethink our global economy and re-evaluate how we measure success, development and progress. Rather than pursuing economic growth through narrowly defined parameters, like GDP, our economic priorities could/should instead focus on how the economy can best serve people and planet. Indicators measuring our quality of life, wellbeing, health, and action on climate change and nature loss, could be used to determine whether a policy is successful. In order to do this, national governments in Scotland, New Zealand, Finland, Iceland and Wales are shifting the priorities in economic policy-making towards the Wellbeing Economy framework.

A Wellbeing Economy is an economy in which policy is designed to serve people and planet. Rather than treating economic growth as an end in and of itself and pursuing it at all costs, a Wellbeing Economy puts our human and planetary needs at the centre of economic activities, ensuring that these needs are all equally met. Since the industrial revolution, our economies have been depleting the earth’s ecosystems and intensifying social and environmental inequality.

The Living Planet Index highlights how our planet’s biodiversity continues to decline, while droughts, wildfires, and extreme temperatures increase. The systemic degradation of the natural environment around the world has had a severe impact on the global economy, as well as the global population’s health. An estimated 7 million deaths are linked to high air pollution levels every year, for example, and by 2030, between 68 million to 132 million people will be living in poverty as a direct result of climate change. A Wellbeing economy recognises the interrelationship between economy, nature, health and sustainability.

Scotland’s wellbeing

The Scottish government has adopted the Wellbeing Economy in principle, defining it as an ‘economy where good, secure and well-paid jobs and growing businesses have driven a significant reduction in poverty’. The government’s  10-year National Strategy for Economic Transformation (NSET) sets out an overriding vision to deliver a Wellbeing Economy for Scotland.

Launched in 2007 and reviewed in 2018, Scotland's National Performance Framework aims to create “a more successful country with opportunities for all of Scotland to flourish through increased well-being, and sustainable and inclusive economic growth.” The framework demonstrates a shift toward broader economic, social, and environmental progress by defining 11 national desired outcomes; these include inclusive, empowered, resilient, and safe communities, and reduced poverty through more equal sharing of opportunities, wealth, and power. To measure the progress toward these outcomes, the government introduced a set of 81 indicators, including loneliness, community ownership, food insecurity, and wealth inequality.

Meanwhile, New Zealand’s first Wellbeing Budget, introduced in 2019, places citizen well-being and environmental sustainability at the heart of budgeting decisions. Informed by living standards data and advice from government science experts, the budget takes into account social and environmental factors, the quality of economic activity, and the long-term impact of current policies. The budget requires that government departments work toward: supporting the physical and mental well-being of communities, creating opportunities for a just transition to a climate-resilient and sustainable economy, improving living standards for the indigenous population, reducing child poverty, addressing domestic violence, and supporting a thriving nation through innovation.

Wellbeing indicators are now being introduced in Quebec, Canada. Using 51 economic, social and environmental indicators to measure the well-being of people in Quebec, a reference tool aims to help all levels of local government put well-being at the heart of collective decisions.

In Glasgow, Locavore has been working to improve Glasgow’s food network through nature-friendly farming techniques, as well as education around food. They operate a shop, a veg box scheme and grow on several sites, which are all within 10 miles of Glasgow city centre.

Locavore’s ambition is to use the money raised from food sales to achieve social and environmental gains by funding projects and education about the global impact of food including climate change, animal welfare, exploitation, and workers’ rights.

By redefining the goals and expectations of politics, businesses, and society, countries can transform the traditional economy focused on economic growth into an economy that builds and sustains a healthy and prosperous world. As the examples above illustrate, policy makers have a vital role to play. Government leaders must open themselves to new ways of thinking and commit to widespread systems innovation, using the principles of a Wellbeing Economy to help guide the way.

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First published: 19 May 2023