If we want a new economy what we measure matters

Is a good country a rich one, or a happy one?

As the economic crisis deepens into a global recession, all eyes are glued to GDP figures. This is understandable. GDP measures economic activity and whether the economy is growing, which crucially tells us how many jobs there are.

But there’s a lot that these numbers don’t tell us about economies: like whether they are leading to better lives for the people that live in them, and whether those lives are sustainable into the future. If the last few years of economic calamity have taught us anything, it’s that economic indicators are too important to be left just to statisticians and economists to ponder.

Today nef (the new economics foundation) publishes the Happy Planet Index. It is a measure of sustainable well-being that ranks countries based on how long people live, how happy they are and the size of their ecological footprint. The index is about efficiency – countries score well by maximising the happiness they create per unit of environmental input.

If you rank countries based on this efficiency, rather than economic output, the most successful nation in the world is Costa Rica. Costa Ricans have higher average life expectancy and reported well-being than people living in the United States, and the country’s Ecological Footprint is one third the size of the US (which ranks 105th).  The UK comes 41st, ahead of other EU countries but behind most Latin American and Caribbean nations.

The full data is available to explore at www.happyplanetindex.org. None of the top ten countries ranked by overall HPI score are among the world’s richest – in fact amongst the top 40 countries by overall HPI score, only four countries have a GDP per capita  of over $15,000. The highest ranking Western European nation is Norway in 29th place, just behind New Zealand in 28th.

The HPI results provide evidence for something we instinctively know to be true – that progress is not just about wealth, and that it is possible to live both happily and sustainably. They show that while the challenges faced by rich resource-intensive nations and those with high levels of poverty and deprivation may be very different, the end goal is the same: to produce happy, healthy lives now and in the future.

A Costa Rican frog sits on a leaf. Judging by the statistics, it is probably very happy. Photograph: Getty Images

Juliet Michaelson is a senior researcher at nef's Centre for Well-Being

Photo: Getty
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How a small tax rise exposed the SNP's anti-austerity talk for just that

The SNP refuse to use their extra powers to lessen austerity, says Kezia Dugdale.

"We will demand an alternative to slash and burn austerity."

With those few words, Nicola Sturgeon sought to reassure the people of England, Wales and Northern Ireland last year that the SNP were a party opposed to public spending cuts. We all remember the general election TV debates, where the First Minister built her celebrity as the leader of the anti-austerity cause.

Last week, though, she was found out. When faced with the choice between using the powers of the Scottish Parliament to invest in the future or imposing cuts to our schools, Nicola Sturgeon chose cuts. Incredible as it sounds the SNP stood shoulder to shoulder with the Tories to vote for hundreds of millions of pounds worth of cuts to schools and other vital public services, rather than asking people to pay a little bit more to invest. That's not the choice of an anti-austerity pin-up. It's a sell-out.

People living outside of Scotland may not be fully aware of the significant shift that has taken place in politics north of the border in the last week. The days of grievance and blaming someone else for decisions made in Scotland appear to be coming to an end.

The SNP's budget is currently making its way through the Scottish Parliament. It will impose hundreds of millions of pounds of cuts to local public services - including our schools. We don't know what cuts the SNP are planning for future years because they are only presenting a one year budget to get them through the election, but we know from the experts that the biggest cuts are likely to come in 2017/18 and 2018/19. For unprotected budgets like education that could mean cuts of 16 per cent.

It doesn't have to be this way, though. The Scottish Parliament has the power to stop these cuts, if only we have the political will to act. Last week I did just that.

I set out a plan, using the new powers we have today, to set a Scottish rate of income tax 1p higher than that set by George Osborne. This would raise an extra half a billion pounds, giving us the chance to stop the cuts to education and other services. Labour would protect education funding in real terms over the next five years in Scotland. Faced with the choice of asking people to pay a little bit more to invest or carrying on with the SNP's cuts, the choice was pretty simple for me - I won't support cuts to our nation’s future prosperity.

Being told by commentators across the political spectrum that my plan is bold should normally set alarm bells ringing. Bold is usually code for saying something unpopular. In reality, it's pretty simple - how can I say I am against cuts but refuse to use the powers we have to stop them?

Experts - including Professors David Bell and David Eiser of the University of Stirling; the Resolution Foundation; and IPPR Scotland - have said our plan is fair because the wealthiest few would pay the most. Trade unions have backed our proposal, because they recognise the damage hundreds of millions of pounds of cuts will do to our schools and the jobs it will cost.

Council leaders have said our plan to pay £100 cashback to low income taxpayers - including pensioners - to ensure they benefit from this plan is workable.

The silliest of all the SNP's objections is that they won't back our plan because the poorest shouldn't have to pay the price of Tory austerity. The idea that imposing hundreds of millions of pounds of spending cuts on our schools and public services won't make the poorest pay is risible. It's not just the poorest who will lose out from cuts to education. Every single family and business in Scotland would benefit from having a world class education system that gives our young the skills they need to make their way in the world.

The next time we hear Nicola Sturgeon talk up her anti-austerity credentials, people should remember how she did nothing when she had the chance to end austerity. Until now it may have been acceptable to say you are opposed to spending cuts but doing nothing to stop them. Those days are rapidly coming to a close. It makes for the most important, and most interesting, election we’ve had in Scotland.

Kezia Dugdale is leader of Scottish Labour.