Election '97: Why quality of life is poor cousin to economic growth

Rising pollution, inequality, crime and social tension are the explanations for a dramatic reduction in economic well-being in Britain since 1980, and again since 1992, according to an updated index of sustainable economic welfare to be published this week.

The index, published by the New Economics Foundation and Friends of the Earth, is a widely used measure of the economy that overcomes some of the disadvantages of gross domestic product (GDP), the conventional indicator of an economy's growth. The new figures mark its first update for five years.

The two groups are calling on political parties to switch the focus of their economic policies from growth per se to the quality of life. The new indicator adjusts official growth figures for changes to a variety of quality- of-life measures.

GDP adds together all forms of economic activity whether these enhance well-being or not, and takes no account of the depletion of resources or any kind of loss of assets.

So, for example, a hurricane which destroys several houses will boost GDP because of all the reconstruction work that follows it.

"Much of what it adds in fact serves to reduce the quality of life. It is as if economists have not yet learned to subtract," comments the forthcoming New Economics Foundation paper.

Although GDP per capita has increased by about one-third in real terms since 1979, the alternative index has declined by nearly one-fifth during the same period. It has fallen by 1.3 per cent a year on average since John Major became Prime Minister.

The most contentious adjustment the index of sustainable economic welfare (ISEW) makes to GDP is a deduction for income inequality. This is the aspect of the alternative indicator which some economists think involves too great a value judgement.

As a result of this criticism of the index when it was first published, the update takes a more cautious approach. The downward adjustment for growing inequality is smaller than it was last time.

However, the paper defends the need to reduce measured well-being as a result of inequality. "A wide range of studies ... now reveal correlations between trends related to conventional economic growth, such as the inequality of earnings (now at its widest this century) and social problems such as emotional stress, ill-health and the erosion of trust."

It also points to rising violent crime rates, youth delinquency, divorce and family break-up as economically costly results of inequality.

Another big adjustment between GDP and the alternative indicator is a correction for environmental degradation. The need for this type of adjustment in principle is almost universally accepted among economists.

The ISEW takes account of the depletion of non-renewable resources such as North Sea oil. The annual cost of the depletion of oil reserves has amounted to more than pounds 50bn a year for the past five years, or about five times the bill for unemployment. It also makes a deduction linked to carbon dioxide emissions as an indicator of the United Kingdom's contribution to global warming, and for other pollution costs.

A third set of adjustments concern what the researchers describe as "defensive expenditures". These are items that are added to GDP but actually reflect reductions in the quality of life.

Examples include health spending on treatment of asthma due to pollution - asthma has become the third-biggest cause of hospital admissions after heart disease and strokes; spending on security measures because of rising crime; and the cost of car accidents.

The paper accepts that its procedures involve value judgements but points out that excluding them is equally judgemental.

The quality of life, it concludes, "Does not easily reduce to quantitative assessment, single perspectives or policy prescriptions.

"Yet if there is to be life beyond growth, economists and politicians need to embrace this complexity."

8 More Isn't Always Better; information available from New Economics Foundation, 1st Floor, Vine Court, 112 Whitechapel Road, London E1 1JE.

The politics of well-being

Average Average

Administration GDP ISEW

growth growth

Winston Churchill Cons 1951-55 2.8% 1.4%

Anthony Eden Cons 1955-57 1.0% 2.7%

Harold Macmillan Cons 1957-63 2.2% 1.5%

Alec Douglas-Home Cons 1963-64 4.1% 1.8%

Harold Wilson Labour 1964-70 2.1% 1.3%

Edward Heath Cons 1970-74 2.3% 5.1%

Harold Wilson Lab 1974-76 1.0% 3.2%

James Callaghan Lab 1976-79 2.7% -1.4%

Margaret Thatcher Cons 1979-90 2.0% -1.0%

John Major Cons 1990-96 1.1% -1.3%

Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreEXCLUSIVE The Shakespeare play that proved too much for more than 100 people
News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Arts and Entertainment
booksThe best children's books for this summer
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Colombia's James Rodriguez celebrates one of his goals during the FIFA World Cup 2014 round of 16 match between Colombia and Uruguay at the Estadio do Maracana in Rio de Janeiro, Brazil
sportColombian World Cup star completes £63m move to Spain
News
news
News
i100
News
people
Sport
Antoine Griezmann has started two of France’s four games so far
sport
Life and Style
techYahoo Japan launches service to delete your files and email your relatives when you die
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
News
i100
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
life
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Sustainability Manager

Competitive: The Green Recruitment Company: Job Title: Scheme Manager (BREEAM)...

Graduate Sustainability Professional

Flexible, depending on experience: The Green Recruitment Company: Job Title: T...

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Project Coordinator/Order Entry, SC Clear

£100 - £110 per day: Orgtel: Project Coordinator/Order Entry Hampshire

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor