Measuring the nation's "wellbeing" as well as its wealth will make it easier for the Government to help British people attain "the good life", David Cameron said today.
The Prime Minister announced that the Office for National Statistics (ONS) has been asked to devise measures of progress and will lead a public debate about what matters most to people.
He denied the move was "airy-fairy and impractical" and said it was important to gain a picture "of how life is improving" to inform ministers in drawing up policy.
"From April next year we will start measuring our progress as a country not just by how our economy is growing, but by how our lives are improving, not just by our standard of living, but by our quality of life," Mr Cameron said in a speech at the Treasury.
He insisted the move did not mean sidelining economic growth as the country tried to recover from the recession but said that ministers need to take a broader perspective.
"We'll continue to measure GDP as we've always done," Mr Cameron said.
"But it is high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country's progress."
He quoted the former US senator Robert Kennedy, who described how GDP "measures everything... except that which makes life worthwhile".
Addressing what he called "the suspicion that all this is a bit airy-fairy and impractical" he recognised that it was impossible to "capture happiness on a spread-sheet".
"If anyone was trying to reduce the whole spectrum of human emotion into one snapshot statistic I would be the first to roll my eyes," he went on.
"But that isn't what this is about.
"Just as the GDP figures don't give the full story of our economy's growth - but do give a useful indicator of where we're heading - so this new measure won't give the full story of our nation's well-being but will give us a general picture of how life is improving."
Measuring wellbeing has been championed by Nobel Prize-winning economists and is being examined by other countries such as France and Canada.
"To those who say that all this sounds like a distraction from the serious business of government, I say finding out what will really improve lives and acting on it is the serious business of government," Mr Cameron said.
The ONS is to lead a debate called the National Wellbeing Project which will seek to establish the key areas that matter most to people's wellbeing.
Potential indicators include health, levels of education, inequalities in income and the environment.
Jil Matheson, the National Statistician and head of the ONS, said: "We must measure what matters - the key elements of national wellbeing. There is no shortage of numbers that could be used to construct measures of wellbeing, but they will only be successful if they are widely accepted and understood.
"We want to develop measures based on what people tell us matters most."
A public debate about what matters most to people could change the nature of democracy, the Prime Minister said.
Mr Cameron dismissed a suggestion the concept was like candy floss - sweet but insubstantial.
"If I thought this was woolly and insubstantial, I wouldn't be bothering with it," he said during a question and answer session following his keynote speech at the Treasury.
"The reasons I think this is important is that the things that government does has a huge impact on the wellbeing that we feel."
He listed the way shopping centres were built, how children were marketed to, and the amount of say patients had over where they were treated as possible examples of what might come up in a public debate.
"These things are important, so I think this debate will help us think more carefully about how we are affecting the quality of people's lives," Mr Cameron said.
Asked if feedback on such issues could change the nature of democracy, Mr Cameron replied: "I think it will. Often what politicians do is they seek evidence to back up the view they already have.
"What I believe this will do is help to provide evidence to create a debate that may encourage us to change our minds about some things we are rather stubborn about."
Asked if religious philosophy and contentment could be considered as a measure of wellbeing, Mr Cameron conceded it was possible.
"If you believe that people having more control over their life is a good thing for their wellbeing, you could come to the opinion that therefore faith-based organisations that involve people and get things done in their communities are a good thing and government should do more to support that," he said.
Ms Matheson added "Whatever evidence is there, we will collect and we will produce independently, and we will publish it."
Len McCluskey, Unite's new general secretary, said: "The so-called happiness index will just be another attempt by the coalition to pull the wool over peoples' eyes.
"No doubt Cameron will use the index to claim that despite rising unemployment, home repossessions, longer NHS waiting lists and unaffordable education, the people of this country are happier under Tory rule. The reality is a gathering gloom.
"All the essential elements which make people happy and secure are fair game for the chop by this coalition Government.
"People need a secure job, a healthy family, a good and affordable education and a roof over their heads. The coalition Government's cuts are targeting these fundamental rights for millions of people."
Shadow Cabinet Office minister Liam Byrne said: "We will support any work to improve quality of life, but it is a great irony that a Government which is doing so much to spread pessimism about the future and is making it harder for people to get on, is going to start measuring wellbeing.
"We hope it will lead the Government to rethink some of their mistakes."Reuse content