Beyond GDP: Reassessing Economic Success and Quality of Life through the Human Development Index 

Bian Al-QASSEM

Abstract

The endeavor to holistically measure societal progress has evolved significantly from its philosophical origins in the Enlightenment era, through Maslow’s psychological frameworks, to the development of comprehensive indices like the Quality-of-Life Index. Central to this evolution has been the predominant use of Gross Domestic Product (GDP) per capita as a proxy for living standards, a metric increasingly scrutinized for its inadequacies in capturing the full spectrum of societal well-being. This paper explores the historical journey and transformation of GDP per capita as a quality-of-life measure, juxtaposed against the backdrop of economic turbulences such as the 2008 financial recession, which have catalyzed a critical reevaluation of GDP’s efficacy. Through an examination of GDP’s origins, methodological evolution, and the critique led by eminent economists and social commentators, the paper argues for a paradigmatic shift towards more nuanced and holistic instruments of assessment. It delves into alternative metrics, notably the Human Development Index (HDI), which incorporates health, education, and income, providing a more comprehensive representation of human progress beyond mere economic output. Despite the HDI’s advancements, the paper critically assesses its limitations and the ongoing quest for a measurement that accurately reflects the complexities of modern societies, technological advancements, and the quality of life. The conclusion underscores the necessity of transcending traditional metrics like GDP in favor of more inclusive and representative measures of economic success and societal progress, highlighting the HDI’s role as a significant, yet imperfect, step toward redefining development economics.

Key words: GDP, Quality of Life, HDI, Limitation, Alternatives.

Tracing the Evolution of Quality-of-Life Metrics: From Philosophical Roots to Economic Indicators

The endeavor to quantify the quality of life within nations and societies is an intellectual tradition that dates to the start of contemporary democratic thought, tracing its origins to the philosophical inquiries of the Enlightenment era. Jean Francois’s 1774 proclamation underscored the fundamental objective of governance as the augmentation of societal happiness, setting a precedent for the consideration of well-being as a central metric of societal progress. This philosophical foundation was further elaborated upon by Abraham Maslow’s hierarchy of needs in 1954, which introduced a psychological dimension to understanding human welfare, and was quantitatively advanced by Ferrans and Powers’ Quality of Life Index in 1985.

The Gross Domestic Product (GDP) per capita has been ubiquitously employed by economists as an indicative proxy of a nation’s quality of life, predicated on the assumption that an increment in GDP per capita inherently signifies an amelioration in the overall societal well-being. This assumption has guided economic policy in developed nations for over half a century, championing GDP growth as a primary objective to elevate the quality of life. Nonetheless, the advent of economic turbulences, exemplified by the 2008 financial recession, has precipitated a critical reassessment of this doctrine. Critics contend that GDP’s capacity to accurately reflect the economic health and societal welfare is fundamentally flawed, necessitating the exploration of alternative metrics that encapsulate a more comprehensive understanding of well-being[1].

Despite its longstanding utilization as a benchmark for measuring standard of living, the ascendancy of GDP per capita as a sacrosanct and unassailable metric is a relatively recent phenomenon. The evolution of GDP per capita as a measure has been marked by significant transformations, reflecting the dynamic and multifaceted nature of economic and social progress. This historical context and the ensuing critique underscore the imperative for a methodological paradigm shift towards more holistic and nuanced instruments of assessing quality of life, beyond the narrow confines of economic output[2].

Gross Domestic Product (GDP): A Comprehensive Indicator of National Economic Health and Growth Dynamics

The Gross Domestic Product (GDP) serves as a comprehensive metric for evaluating the aggregate market value of all goods and services produced and exchanged within the territorial confines of a nation over a specified period, typically one year. This metric functions as a pivotal economic indicator, delineating the cumulative income and output of a nation. It affords a dual modality of assessment: either as a per capita measure, offering insights into individual economic contribution and well-being, or as a percentage indicator of national economic growth[3].

GDP’s utility extends beyond mere economic quantification; it acts as a barometer of a nation’s financial health and developmental trajectory, enabling comparisons of wealth and prosperity across global entities. Moreover, it is instrumental in gauging the temporal dynamics of a nation’s economy, tracking phases of growth or decline. Concomitantly, GDP measurements are intrinsically linked to evaluations of living standards within a nation, underpinned by the rationale that an escalation in GDP is typically synonymous with an upliftment in the populace’s standard of living.

Among the methodologies employed to calculate GDP, the expenditure approach is predominant. This method encapsulates the totality of domestic consumption, investment expenditures, government spending, and net exports. Such a framework is crucial for dissecting the economic growth narrative, enabling an analysis of the proportionate contribution of production enhancements attributable to inflationary pressures versus genuine economic expansion. Furthermore, it elucidates the distribution of gross national income across consumption, investment, and savings, thereby providing a nuanced understanding of economic health and potential for future growth[4].

Origins and Evolution of GDP: Historical Contexts and Critical Perspectives on Economic Measurement

The genesis of the Gross Domestic Product (GDP) as a metric of economic prosperity can be traced back to the interwar period, a time marked by global economic instability and the quest to comprehend and mitigate the repercussions of the Great Depression. This era witnessed the pioneering efforts of economists, notably Simon Kuznets and John Maynard Keynes, in conceptualizing and operationalizing GDP as a systematic measure to evaluate national income and production capacities across nations. Kuznets, in his seminal work of 1932, embarked on an ambitious project to quantify the United States’ national income, aiming to grasp the magnitude of the Great Depression’s economic impact. His endeavors culminated in the formulation of GDP during the 1940s, employing a methodology that harnessed the sparse market data then available to produce a coherent metric of economic output[5].

The pivotal moment for GDP’s ascension to prominence occurred in the 1940s with Keynes’s advocacy for a comprehensive method to gauge the British economy’s productive potential, particularly highlighted in his publication „How to Pay for the War”. This advocacy led to the establishment of the first national accounts in Britain in 1941, and subsequently, the adoption of the System of National Accounts by the United Nations in 1953, thereby institutionalizing GDP as a cornerstone of economic analysis and policy formulation. Initially conceived as a tool for wartime economic assessment, GDP rapidly evolved into a universally endorsed barometer of national output and living standards[6].

Keynes’s methodology for GDP calculation, which encompassed private consumption, investment, and government expenditure, diverged from Kuznets’s original model by integrating government spending into the aggregate national income. This approach, developed out of wartime exigencies, gained widespread acceptance internationally, reshaping the landscape of economic measurement well beyond the war’s conclusion[7].

Despite the widespread adoption of GDP, Kuznets, a pivotal figure in transforming economics into an empirical discipline post-war, persistently cautioned against the oversimplification of equating GDP growth with well-being. He underscored the limitations of GDP as a mere indicator of market transactions, which inherently overlooked non-market activities crucial to social and economic well-being, such as unpaid domestic work and community services.

The critical perspectives offered by Kuznets gained traction over the subsequent decades, culminating in a call for a fundamental reevaluation of national accounting systems. He advocated for a more nuanced approach that distinguished between the qualitative and quantitative aspects of growth, costs and return and between the short and long term, addressing the broader implications of economic activities on societal well-being and environmental sustainability[8].

Kuznets’s critique extended to the misrepresentation of economic health by GDP, as it failed to differentiate between productive and destructive activities, nor did it account for the sustainability of resources used in consumption or the preservation of environmental and social cohesion.

In light of recurring economic downturns, exemplified by the 2008 recession, the limitations of GDP as a solitary measure of societal progress have become increasingly apparent. These crises have intensified the scrutiny of GDP-centric policies, propelling a discourse that distinguishes between economic expansion and the holistic well-being of a society. This critical examination underscores the imperative to transcend traditional metrics like GDP in favor of more comprehensive indicators that genuinely encapsulate the multifaceted dimensions of human and ecological well-being.

Gross Domestic Product (GDP): Evaluating Its Role and Efficacy in National Development Assessment

The Gross Domestic Product (GDP) index stands as a cornerstone in assessing a nation’s development due to its multifaceted advantages. Firstly, it serves as a broad indicator of development, encapsulating the overall economic performance of a country. Its simplicity lies in the ease of measuring growth in percentage terms, facilitating straightforward comparisons over time and across borders. This cardinal ranking attribute allows for direct comparisons between countries by quantifying disparities as multiples or fractions. Moreover, its cost-effectiveness and universal applicability make it an accessible and reliable indicator, as it is calculated using a standardized formula adopted by all nations. Governments find GDP indispensable in gauging the efficacy of economic policies, offering insights into the success or shortcomings of interventions. Furthermore, GDP can be dissected into GDP per capita, accounting for population differences and providing a nuanced understanding of economic well-being[9].

The accessibility and simplicity of GDP data, coupled with its universal applicability, make it a preferred tool for assessing quality of life. Despite critiques highlighting its narrow focus on economic output, GDP’s positive correlations with life expectancy, literacy rates, healthcare access, and communication infrastructure underscore its significance in reflecting societal welfare.

American economics Stiglitz in his Report by the Commission on the Measurement of Economic Performance and Social Progress summed the issue saying: “GDP is not wrong as such but is wrongly used”[10].

However, a nuanced approach is warranted to distinguish between activities genuinely enhancing standards of living and those merely sustaining them[11].

Beyond Gross Domestic Product: A Critical Analysis of GDP’s Efficacy as a Sole Indicator of Economic and Social Advancement

The Gross Domestic Product (GDP) has become the preeminent benchmark for gauging both economic and social advancement across nations. This metric, extensively endorsed due to its comprehensive assessment of a nation’s economic performance, serves as a critical tool for governmental entities to evaluate policy effectiveness. Despite its widespread application and the positive correlation observed between higher GDP figures and improvements in societal markers such as life expectancy, literacy rates, nutrition, healthcare, and communication infrastructure, the metric’s ability to accurately reflect the welfare and qualitative aspects of life remains under scrutiny.

The GDP framework, while facilitating an easy comparison across countries and providing a cardinal means for economic ranking, inherently lacks the capacity to capture the multi-dimensional changes on human capital and societal well-being. Its methodology, heavily reliant on monetary transactions, systematically excludes non-market activities crucial to the socio-economic fabric, such as informal sector contributions, distribution of goods, home production, black market activity and barter exchanges prevalent in developing economies. This exclusion not only distorts the economic portrayal of such societies but also overlooks the distributional aspects of income and wealth, thereby masking the disparities within and across nations[12].

Furthermore, the intrinsic limitations of GDP, lie in its materialistic orientation and failure to account for the societal, environmental, adjustment for leisure time and technological nuances that constitute the modern socio-economic landscape, The failure to indicate whether the nation’s rate of growth is sustainable or not and treating the replacement of depreciated capital the same as the creation of new capital.

The GDP metric, by equating all expenditures as beneficial, disregards the adverse impacts of certain economic activities on social welfare and environmental sustainability[13].

As the British social commentator George Monbiot puts it: The problem with gross domestic product is the gross bit. There are no deductions involved: all economic activity is accounted as if it were of positive value. Social harm is added to, not subtracted from it.

For instance, expenditures arising from environmental degradation or social discord are treated as positive contributions to economic growth, thus obscuring the true cost of such activities on societal health and ecological balance[14].

This critique extends to the incapacity of GDP to integrate the advancements in technology and the quality of life that do not directly transact through market mechanisms. These omissions can mask the adverse effects of economic growth on social equity and environmental degradation. Critics like George Monbiot and Joseph Stiglitz argue that GDP’s indiscriminate inclusion of all economic activities—regardless of their societal impact—presents a grossly materialistic and distorted picture of societal progress, suggesting that it reinforces materialistic values and overlooks factors like technological advancement and quality of life during peaceful times. In essence, GDP’s narrow focus on economic transactions fails to capture the complexities of modern societies, leading to an overemphasis on material wealth at the expense of broader measures of well-being and progress.

More so, GDP’s reliance on aggregate economic activity can be misleading, particularly in populous nations where high GDP figures may simply reflect the sheer volume of people rather than an indication of individual prosperity or economic efficiency. This superficial measure fails to account for the distribution of wealth and the ensuing socioeconomic disparities within a country. Moreover, traditional GDP calculations ignore crucial developmental goals and societal values, such as cultural diversity and ecological sustainability[15].

To sum it up, and as Senator Robert Kennedy famously said:  In truth, “GDP measures everything,”, “except that which makes life worthwhile”[16].

The misapplication of GDP as a singular measure of national prosperity and well-being has led to calls for a reevaluation of economic indicators that more holistically represent human development, social equity, and environmental integrity. This necessitates the adoption of a more nuanced approach to economic measurement, one that transcends the conventional GDP paradigm to embrace a broader spectrum of indicators reflective of the true quality of life and sustainable development.

As International Monetary Fund head Christine Lagarde, Nobel prize-winning economist Joseph Stiglitz and MIT professor Erik Brynjolfsson noted at the 2016 World Economic Forum in Davos, Switzerland, „GDP is a poor way of assessing the health of our economies and we urgently need to find a new measure”[17].

In summation, the reliance on GDP as the primary indicator of economic success and societal progress is increasingly recognized as a flawed approach, given its disregard for critical dimensions of human and ecological well-being. The challenge lies in evolving beyond GDP to adopt more inclusive and representative metrics that accurately capture the complexity of contemporary societies and the multiplicity of factors contributing to genuine human development and environmental sustainability.

Reevaluating Economic Metrics: Toward a Comprehensive Framework Beyond GDP for Measuring Societal Progress and Quality of Life

The scholarly discourse underscores a critical reassessment of the Gross Domestic Product (GDP) as the predominant framework for gauging economic and societal progression. A robust body of research advocates for a refined paradigm, one that better aligns with the multifaceted objectives nations aspire towards, namely the enhancement of the quality of life for their constituents. This reconsideration is precipitated by the acknowledgment that while GDP per capita has historically served as a benchmark for economic health, its correlation with the broader spectrum of community well-being remains tenuous.

Recent empirical investigations, particularly over the past decade, have endeavored to delineate a more accurate portrayal of national welfare, revealing a striking divergence from the narrative traditionally inferred through GDP metrics. For instance, a notable study by Cole (2006) illuminates the paradox of industrialized nations experiencing marked increases in GDP per capita yet observing no commensurate rise in the perceived happiness among their populations[18]. Such findings underscore the inadequacy of GDP per capita as a solitary measure of societal well-being and challenge the conventional wisdom that equates economic expansion with enhanced quality of life[19].

Despite the global advancements in living standards attributed to economic growth, the recognition that GDP fails to encapsulate the essence of national welfare has catalyzed the search for alternative methodologies. These methodologies aim to furnish a more nuanced understanding of an economy’s health, incorporating dimensions beyond mere financial prosperity to encompass societal well-being and environmental sustainability.

The knowledge gained from the many attempts to find a viable alternative measure of quality of life begins to form an outline of a measurement system that should be aspired to. First, this method must put more emphasis on net measures, accounting for movement of profits and depreciation of capital. Second, this method must widen its scope to include indicators that cannot be directly translated into monetary terms.   Finally, this method should allow for the input of whomever is using it to weight different factors of quality of life according to their preference[20].

Considering these insights, there has been a growing consensus among economists, including those associated with the United Nations Development Programme, to pivot from the conventional focus on national income accounting towards a more people-centric approach in policy formulation.

The discourse identifies several promising candidates for transcending the traditional GDP model, including the application of synthetic indicators such as the Human Development Index (HDI), the Genuine Progress Indicator (GPI), and the Happy Planet Index (HPI). Each of these indices endeavors to amalgamate both income and non-income variables such as life expectancy, literacy rates, environmental indicators, measures of inequality and so on., offering a more comprehensive measure of life quality. Nonetheless, the quest for an optimal metric that fully accounts for the impact of technological advancements and the intangible benefits they confer remains ongoing[21].

The exploration of alternative indicators, notably the synthetic indicators capability approach and adjusted GDPs, reflects a concerted effort to reconcile the limitations inherent in GDP-centric assessments. These alternatives, while promising, also encounter challenges. As such, the pursuit of a more refined economic measure that faithfully reflects the complexities of modern societies and the diverse facets of human development necessitates ongoing scholarly inquiry and policy innovation.

This paradigm shift is encapsulated in the development of the HDI, a composite metric designed to provide a holistic assessment of a country’s progress by integrating indicators of health, education, and living standards.

In summation, the prevailing reliance on GDP as the principal indicator of economic and social progress is increasingly contested within the academic and policy-making communities. The imperative to develop and implement measurement tools that encapsulate a broader spectrum of human and environmental well-being represents a critical frontier in the evolution of development economics.

Only one metric has successfully challenged the dominance of growth-centric thinking. This is referred to as the Human Development Index.
Mahboob-ul-Haq, a Pakistani economist, international development theorist, and politician developed it in the early 1990s based on developmental notions introduced by Amartya Sen.

Revisiting Development Metrics: The Human Development Index (HDI) as a Holistic Alternative to GDP

The United Nations progress Programme (UNDP) website defines the Human Development Index (HDI) as a tool that prioritizes people capabilities as the main factors for evaluating a country’s progress, rather than just focusing on economic growth.

The Human Development Index (HDI), conceived as a comprehensive measure for assessing the multifaceted aspects of a nation’s progress beyond mere economic growth, encapsulates the essence of economic development through its nuanced approach[22].

Recognized for its capability to provide a holistic view of development, the HDI integrates critical dimensions—education, health, and income—into a unified indicator, thus offering a more rounded perspective on the developmental status of countries on a scale from zero to one. This scalar representation, as elucidated in the Human Development Report[23], signifies the extent of development, where zero implies no development and one denotes full development. Notably, the HDI’s methodology and components have undergone refinements, as detailed in the Human Development Report (2010), to better reflect the evolving dynamics of global development[24].

The construction of the HDI involves three primary indices: the Life Expectancy Index, the Education Index, and the Income Index. These indices collectively furnish a composite measure that transcends the traditional GDP metric by accounting for the broader aspects of human welfare and potential. The Life Expectancy Index, reflecting health and longevity, ranges between 20-85; the Education Index quantifies educational attainment through mean years of schooling and projected learning; and the Income Index gauges economic prosperity[25].

The HDI criteria are crafted to encompass a wide range of social, political, and economic factors in different nations, serving as an indicator of their quality of life.
It prioritizes human development above the Gross Domestic Product (GDP) and considers both a country’s standard of living and its ability to produce goods and services. A nation’s education and health are considered as significant as its economic strength. GDP is considered a tool to achieve a goal, rather than the goal itself. GNP per capita, representing the typical person’s purchasing power, is a crucial element in the calculation of the Human Development Index, but not the sole one.
This composite measure, underpinned by Amartya Sen’s capacities approach first proposed in 1985, emphasizes the expansion of individual freedoms and capabilities as the core of development. The HDI, thus, aligns with a paradigm that values human development over GDP’s narrow focus on economic output. This reorientation towards a capabilities-based assessment was further strengthened by the contributions of Martha Nussbaum (2011) and Noorbaksh (1998) to the pioneering work of Amartya Sen alongside Mahbub ul Haq (1995), leading to the HDI’s introduction in 1990[26].

The HDI’s application extends beyond academic discourse, serving as a practical tool for policymakers and development practitioners to identify areas requiring targeted interventions and to craft policies that foster holistic human development.

In contrast to GDP, which predominantly captures economic transactions, the HDI offers a more comprehensive account of a nation’s development, taking into consideration several aspects of human well-being. As such, the HDI emerges as a superior metric for gauging true development, advocating for a shift in focus from economic output to enhancing human well-being and freedom.

Through its nuanced approach, the HDI not only challenges the primacy of GDP in development discourse but also illuminates the path towards more equitable and sustainable development paradigms. It underscores the imperative for development strategies that are inclusive and attentive to the diverse aspects of human progress, thereby contributing to a more equitable global society.

Enhancing Policy and Development Monitoring: The Advantages of the Human Development Index in Policy Formulation and Developmental Assessment

The paramountcy of the Human Development Index (HDI) in the domain of policy formulation and developmental monitoring cannot be overstated. As a quintessential instrument, the HDI empowers policymakers to longitudinally track progress and juxtapose their nation’s developmental trajectory against global counterparts. This index is instrumental in identifying areas necessitating significant enhancements, thereby facilitating targeted intervention strategies that prioritize the well-being and quality of life of the populace.

Engaging with the HDI reveals both the potential benefits and inherent limitations of employing this metric for international comparisons of living standards. On the beneficial side, the HDI provides a predictive lens into future living standards by incorporating pivotal factors like education, life expectancy and income levels. These indicators, notable for their accessibility and simplicity in collection, underscore the HDI’s utility in offering a comprehensive assessment of human development. Beyond economic metrics alone, the HDI’s inclusion of social indicators, health status, and educational attainment furnishes a layered understanding of societal well-being and liberty. This multifaceted approach lends the HDI enhanced credibility over GDP-centric assessments, positioning it as a more reliable gauge of a country’s developmental status[27].

Moreover, the HDI, distilled into a singular value ranging from 0 to 1, simplifies the comparative analysis across nations, thereby enabling a streamlined evaluation of global development disparities (human, n.d.). This metric not only highlights areas of immediate concern for policymakers but also provides a precision tool for measuring the interplay between health, education, and income levels—facets central to the socio-economic fabric of any nation.

Critically, the HDI’s methodology, which encompasses GDP per capita measures, shifts the focus from aggregate economic output to the average individual’s contribution to economic well-being and development. This nuanced approach permits a more granular analysis of a nation’s socio-economic landscape, prompting policy reevaluation and the formulation of initiatives aimed at holistic improvement[28].

The scholarly discourse acknowledges the HDI as a paradigm shift from traditional income-centric models towards a more comprehensive understanding of growth. Despite acknowledged challenges concerning the index’s components and statistical robustness, the HDI is lauded for its capacity to encapsulate complex developmental dimensions, urging a reoriented focus towards constituent factors of human progress[29].

While the HDI may not encapsulate the entirety of a country’s economic advancement, its role in delineating pathways for enhancing population living conditions remains indubitable. By transcending mere economic indicators, the HDI heralds a more nuanced, inclusive approach to development, underscoring the intricate interdependencies of health, education, and income in fostering societal advancement and human flourishing.

Critical Assessment and Evolutionary Challenges of the Human Development Index in Reflecting Developmental Complexities

The Human Development Index (HDI), while serving as a seminal metric in the evaluation of developmental progress across nations, is subject to inherent limitations that necessitate a nuanced understanding of its application and interpretation. it is subject to ongoing debate and revision to reflect the complexities of development more accurately, including the integration of environmental and technological advancements.

As a composite measure amalgamating data across health, education, and income dimensions, the HDI potentially masks intranational disparities and overlooks several critical facets of human advancement such as environmental sustainability and gender equality. The augmentation of the HDI with supplementary indicators is imperative for a holistic appraisal of a nation’s developmental landscape.

Critiques of the HDI underscore the metric’s inadequacy in fully capturing the distributive characteristics of development and its propensity to convey misleading representations of perpetual GDP per capita growth in affluent nations. The methodological underpinnings of the HDI, including the selection and weighting of its components, invite subjectivity, thus raising questions regarding its comprehensive reflectiveness of well-being[30].

The metric’s inability to consistently incorporate data across countries and over time introduces variability and inconsistency, diminishing its utility as a reliable longitudinal measure. Critics argue that the homogeneity of HDI values among industrialized nations and the potential for inaccuracies in measurement further diminish its comparative relevance[31].

Notably, Hicks (1997)[32] highlighted the HDI’s omission of distributional effects, suggesting that while it enumerates achievements in health, education, and income, it fails to account for the dispersal of these benefits across the populace. This oversight extends to the disregard for societal valuations of well-being, which may prioritize material possessions over educational attainment, thereby questioning the HDI’s universal applicability[33].

Moreover, the HDI does not reflect the dynamic nature of development, leading to potential disparities within nations, and lacks consistency in data collection across time, rendering it a less reliable tool for policy evaluation and the identification of areas needing improvement.

Further critique points to the HDI’s constrained scope, emphasizing its focus on quantifiable achievements in education rather than the substantive quality or utility of educational outcomes. This limitation, coupled with the HDI’s static nature and lack of responsiveness to evolving economic and social dynamics, constrains its efficacy as a dynamic tool for policy formulation.

Moreover, the HDI’s reliance on a limited set of metrics neglects crucial dimensions of development such as gender equality, mortality rates, poverty, and income inequality, thus providing an incomplete picture of a nation’s well-being. The methodology’s lack of granularity, evident in the uniform application of indicators across diverse educational systems and the arbitrary establishment of benchmarks, further dilutes its diagnostic value.

In summation, while the HDI represents a significant advancement in conceptualizing and measuring development, its limitations, and the critiques it faces underscore the necessity for continuous refinement and the integration of additional dimensions to accurately reflect the complexities of human progress. This evolution towards a more inclusive and adaptive metric is essential for informing policy decisions that genuinely enhance the quality of life and well-being of populations globally.

Conclusion

In conclusion, the reliance on GDP as the primary indicator of economic success and societal progress is increasingly recognized as a flawed approach, given its disregard for critical dimensions of human and ecological well-being. The limitations of GDP, including its narrow focus on economic output, its failure to account for non-market activities, and its inability to capture the qualitative aspects of life, have prompted a critical reassessment of this metric. As a result, alternative indicators such as the Human Development Index (HDI) have emerged as more comprehensive measures of quality of life. The HDI incorporates dimensions beyond economic growth, such as education, health, and income, to provide a more holistic assessment of human development. While the HDI has its own limitations and challenges, it represents a paradigm shift towards a more inclusive and nuanced understanding of development.

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[2]  Carr, op. cit. p. 2.

[3]  Jordan, J, Human Development Index: The new GDP?, Medium, 2017; Gertner, J, The Rise and Fall of the G.D.P., The New York Times Magazine, 2010, p. 1.

[4]  What are the advantages and disadvantages of Gross Domestic Product? (no date). Cliffsnotes.

[5] Kapoor, A. and Debroy, B, GDP Is Not a Measure of Human Well-Being , Harvard Business Review, 2019; Stiglitz, J.E, GDP Is the Wrong Tool for Measuring What Matters, Scientific American, 2020.

[6]  Killelea, S, The Problem with GDP, Vision of Humanity, no date.  

[7]   Kapoor, op. cit.

[8]  McNeill, J, GDP Growth and Human Wellbeing: A Brief Look at Why We Need a Better Measure of Progress,  (Prepared for Higher School Certificate Students by) University of New England, Armidale, 1999, pp. 4-5.

[9]  Lashmar, H, The Human Development Index – a better indicator for success?, SDG Action, 2018; Pros and Cons of GDP (2013). Economics blog, 26 September.

[10] Stiglitz, J.E. et al, Report by the Commission on the Measurement of Economic Performance and Social Progress (CMEPSP), Paris, 2009, p. 8.

[11]  McNeill, op. cit. p. 7.

[12] McNeill, op. cit. p. 5; Giannetti, op. cit. p. 12.

[13] McNeill, op. cit.  pp. 1-2; Pros, 2013, op. cit.

[14] McNeill, op. cit. p. 3.

[15]  Giannetti, op. cit. p. 12.

[16]  Jordan, op. cit.; Stiglitz, 2020, op. cit.

[17]  Thoma, M, Why GDP fails as a measure of well-being, CBS News, 2016.

[18]   Cole, A, The Politics of Happiness, AQ: Australian Quarterly, vol. 78, no. 5, 2006, p. 22.

[19]   Stiglitz, J.E. et al, Mismeasuring our lives : why GDP doesn’t add up, New York: New Press, 2010.

[20]  Carr, op. cit. pp. 2-4.

[21]  What, op. cit.; Thoma, op. cit.

[22]   George, A, Why Human Development Index is the New GDP? Why is India ranked so low in the Human Development Index (HDI)?, Medium, 2023.

[23]  UNDP (1999). Human Development Report. New York: Oxford University Press, pp. 159-160.

[24]  Ivy Panda, Human Development Index: Limitations and Benefits Essay, 2023; Al-Hilani, H, HDI as a Measure of Human Development: A Better Index than the Income Approach?, IOSR Journal of Business and Management, 2(5), 2012,  p. 24.­­­

[25]  George, op. cit.; Jordan op. cit.; Lashmar, op. cit.

[26]   Gertner, op. cit. pp. 6-7; Benjamin, D. et al, Measuring the Essence of the Good Life, Finance & Development, 58(4), 2021, pp. 33–34.

[27]  Ivy Panda, op. cit.

[28]  Pros and Cons of Human Development Index (HDI, Pros an Cons, 2018.

[29]  Al-Hilani,  op. cit. p.25.

[30]  Benjamin, op. cit. P.34.

[31]  Pros, 2018, , op. cit.

[32]  Hicks, D.A. (1997). The Inequality Adjusted Human Development Index: A Constructive Proposal. World Development. 25 (8), 1283-1298.

[33]  Al-Hilani , op. cit.  p.25.