Economy 4.0

Et tu, OECD?

David Brancaccio May 24, 2011

You would have thought the venerable promoters of the global economy at the Organization for Economic Cooperation and Development would have been GDP’s closest friends. These are suit-wearing, buttoned-down types, not prone to anything that smacks of new-age grooviness. Yet the OECD has just joined a kind of economic protest movement to make the case that there is more to our well-being than is captured by the standard measure of economic progress.

What is GDP’s problem? Among other things, critics say the measure doesn’t distinguish between the kinds of activity that adds to our well-being (such as buying a good book or paying for a dance lesson) and the kind of activity that does not (buying cigarettes).

Now the OECD is taking a good whack of its own at its old friend GDP. This club of 34 countries has just announced a pretty slick system called its “Better Life Index.” It is an attempt to better answer the questions “How are we doing?” and “How do we measure it?”

The OECD is quite proud of the fact that anyone with an Internet connection can be part of the calculation. Some folks behind closed doors in a fancy OECD building deciding what constitutes a better life would be one thing. Yet the new system lets you give extra weight or less weight to a series of eleven “better life” criteria and then see how a country rates. Housing, jobs, sense of community a big deal with you? Turn up the emphasis on those a few notches. Are you a workaholic who doesn’t care so much about work-life balance? Then turn down the emphasis a few notches in that category. As you slide the criteria up or down you can watch the well-being ranking of countries rise and fall.

I noticed that the United States falls a bit when you turn up the emphasis on a category labeled “Safety.” I plan to look into that. Give it a try, and find out how countries are doing at providing a better life for residents, according to your own set of weights and preferences.

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