Almost everyone is familiar with the term “Gross Domestic Product,” or “GDP,” a yardstick against which the progress and development of nations is measured. It is defined as the monetary value of all goods and services created within a country in a time period.

But, as Robert F. Kennedy once pointed out, “it does not allow for the health of our families, the quality of their education… it measures everything, in short, except that which makes life worthwhile.”

Stanley Kuznets, the economist who created the GDP measurement, said that “the welfare of a nation can scarcely be inferred from a measure of national income.”

So why is the GDP consistently considered the most important indicator of a country’s success level?

In 2009, The New York Bureau Chief of The Economist rephrased the question: “What if countries competed with each other to become the most socially innovative in the world?” After all, the world that matters on a most visceral level is not made up of dollar signs and algorithms. Rather, it is a living, breathing planet full of people who live and die and face challenges ranging from survival to social injustice.

Consideration of this simple fact led to the birth of the Social Progress Imperative, a movement to measure the success of countries, companies and organizations in a new way, but also in tandem with economic measurements such as GDP.

Current CEO of the Imperative, Michael Green, demonstrated that the two are positively correlated, but not inextricably so. For example, in the 2015 ranking, New Zealand and Norway achieved similar Social Progress Index (SPI) scores, even though New Zealand’s GDP is about 50 percent of Norway’s.

There have been previous efforts to measure national progress beyond the scope of the GDP, such as the Human Development Index (HDI), the Your Better Life Index, and the Legatum Prosperity Index. The primary feature that sets SPI apart from these indexes is that it focuses solely on social outcomes rather than economic ones. With this focus, it tries to take the scope of these previous initiatives to a new level. The Social Progress Index measures the success of a country in three core areas: basic human needs, foundations of wellbeing, and opportunity. And, it measures the outcomes occurring in a country, such as actual availability and accessibility of goods and services, not laws passed with the intention of providing them.

The possibilities of looking at success through this new lens are practically endless. Once there is a better understanding of which countries have the highest overall success, economists, politicians, nonprofits and members from every sector can start to examine what works and what doesn’t work. Goals can be created and prioritized, and opportunity and wellbeing can be increased, which will likely drive economic progress and increase GDP. With more GDP, more resources can be created and provided that will increase SPI.

And, it’s not only countries that can be measured using SPI. Smaller governments, such as cities and states, can view the effect of policies and shape new ones.

Charitable organizations could be ranked so that they can understand their own success levels. Potential patrons can be aware of how effectively their donations are being utilized.
Companies could understand their effect on the world beyond the economic sphere.

Understanding what leads to overall success can help shape initiatives that will create more success, no matter the organization or venue. The Social Progress Index is an exciting way to foster progress on a very human level.

Emily Dieckman

Sources: TED, OECD Better Life Index, Social Progress Imperative 1, Social Progress Imperative 2
Photo: TED