Since the introduction of double entry bookkeeping in the fifteenth century, it has been widely accepted that profit equates to value. This concept moved to nation states and today we measure how well a country is doing by its Gross Domestic Product or GDP. By adding up the cost of all the goods and services in a particular period (normally a quarter or a year) the GDP is calculated. Positive GDP means that economically, South Africa is doing well and negative GDP tells us we are in, or potentially are headed for, a recession.
Beyond GDP – 11 new measurements
It is now acknowledged that value means more than a binary measure of more or less money in the economy– we should look to broader considerations as to how we, as a nation, are performing.
Some well known organisations such as the Organisation for Economic Cooperation and Development (OECD) and the World Economic Forum have looked at other measurements to establish our well being.
The OECD has released its “Better Life Index” which consists of eleven alternate measurements, such as:
Other factors are how safe we are, adequacy of housing, the jobs available, our health, income, participation in community activities and life satisfaction. Have a look at South Africa’s full report card here.
These surveys show that we are moving to more holistic methods of measurement. What is surprising about all these new methods is there is a correlation between GDP and the Better Life Index – countries with positive GDP tend to score well on the Better Life Index. The accountants were right all along!
This is a welcome development and shows that even the wealthiest nations still have work to do in improving their populations’ well-being.