Michael Green: What the Social Progress Index can reveal about your country

Summary

In this speech, the speaker highlights the limitations of GDP as a measure of a nation's success, explaining its inability to account for well-being, fairness, or environmental sustainability. The speaker introduces the Social Progress Index (SPI), a new framework for measuring a country's performance based on real human needs: survival, access to opportunity, and freedom from discrimination. Using examples from countries like New Zealand and Brazil, the speaker emphasizes the importance of social progress alongside economic growth to ensure inclusive, sustainable development for future generations.

Takeaways

• 📊 GDP was introduced by Simon Kuznets in 1934 to measure economic performance, but it's not a measure of well-being.
• ⚠️ Kuznets warned that GDP should not be used as the sole guide for decision-making or to infer a nation's welfare.
• 🌍 GDP has become the dominant benchmark of success worldwide, influencing markets and political decisions globally.
• ❌ GDP has significant flaws, including ignoring environmental impact, counting harmful activities as progress, and not measuring happiness, justice, or fairness.
• 💡 The speaker introduces the Social Progress Index (SPI) as an alternative to GDP for measuring a country's success, focusing on people's real well-being.
• 🛠️ The SPI is built around three dimensions: meeting basic human needs, access to tools for improvement, and opportunities for personal advancement.
• 🌿 Unlike GDP, the SPI includes indicators for things like health, education, rights, and environmental sustainability.
• 📉 The speaker emphasizes that economic growth (GDP) does not automatically lead to social progress, especially as countries become wealthier.
• 🇧🇷 Brazil is highlighted as an example of a country that can grow its GDP but needs to prioritize social progress to avoid stagnation.
• 🏙️ The SPI can be applied at various levels, from countries to regions, to develop more inclusive, sustainable policies for real improvements in quality of life.

Q & A

Who was Simon Kuznets, and why is his work significant?

Simon Kuznets was an economist who delivered a report to the U.S. Congress in 1934 titled 'National Income, 1929-1932.' His work laid the foundation for how countries measure economic performance using Gross Domestic Product (GDP).

What warning did Simon Kuznets give about GDP in his report?

Kuznets warned that GDP should not be used as a measure of a nation's well-being. He cautioned that it only measures economic performance and does not capture aspects like welfare, happiness, or social progress.

Why is GDP considered flawed according to the speaker?

GDP is flawed because it ignores critical aspects such as environmental impact, fairness, justice, and social well-being. It counts activities like building bombs or prisons as progress, but it fails to measure factors like happiness, community, and sustainability.

What alternative to GDP does the speaker propose?

The speaker proposes the Social Progress Index (SPI) as an alternative to GDP. This index measures the well-being of societies based on criteria such as basic human needs, access to education and health, and individual freedoms, independent of GDP.

What are the three dimensions of the Social Progress Index?

The three dimensions of the Social Progress Index are: 1) Basic human needs like food, water, shelter, and safety, 2) Access to education, information, healthcare, and a sustainable environment, and 3) Opportunities for individuals to pursue their ambitions, rights, and freedom of choice.

Why does the speaker argue that GDP is less useful for middle and high-income countries?

For middle and high-income countries, the relationship between GDP and social progress flattens, meaning that additional GDP provides diminishing returns in terms of social progress. GDP becomes less helpful as a guide for further development.

What does the speaker use Brazil as an example of?

The speaker uses Brazil as an example of a country that is efficiently turning its GDP into social progress. However, the speaker also warns that economic growth alone isn't enough; Brazil must prioritize social progress in its development plan.

What is the significance of the subnational Social Progress Index created for the Amazon region?

The subnational Social Progress Index for the Amazon region allows policymakers and organizations to better understand the real quality of life in specific areas. This helps them create more effective development plans that improve lives while protecting the environment.

How does the Social Progress Index measure societal achievement differently from GDP?

Unlike GDP, which measures economic output, the Social Progress Index focuses on real achievements, such as life expectancy, quality of life, and whether people experience discrimination. It looks at outcomes rather than government spending or legal frameworks.

What vision does the speaker have for the future of societal measurement?

The speaker envisions a future where societal measurement moves beyond GDP. They imagine a world where nonprofits, businesses, and politicians are evaluated based on their contributions to social progress, and where real improvements in people’s lives are prioritized.

Outlines

00:00

📊 The Origin of GDP and Its Flaws

In 1934, Simon Kuznets presented a report, 'National Income, 1929-1932', to the U.S. Congress, which laid the foundation for GDP as a key measure of national success. Despite its widespread adoption, Kuznets warned that GDP alone couldn't capture the welfare of a nation. The focus on GDP has led to flawed decisions, as it overlooks vital aspects like the environment, justice, and happiness. The speaker suggests that GDP should not dominate how we define success and urges a reconsideration of how we measure societal well-being.

05:03

🌍 Introducing the Social Progress Index

The speaker introduces the Social Progress Index (SPI) as an alternative to GDP for measuring societal well-being. SPI evaluates societies across three dimensions: basic needs (food, water, shelter, safety), foundations for improving lives (education, health, environment), and access to opportunities (freedom, rights, lack of discrimination). SPI offers a more accurate representation of societal progress by measuring actual outcomes, like life quality and discrimination experiences. The speaker humorously compares various countries' performance, emphasizing that GDP isn't destiny and that countries can make significant social progress even without high GDP levels.

10:04

📈 The Limits of GDP in Driving Social Progress

The speaker explains how GDP correlates with social progress, particularly for poorer countries where additional GDP leads to more significant social improvements. However, for wealthier nations, this relationship flattens, showing diminishing returns from GDP growth. Using Brazil as an example, the speaker illustrates that countries need to prioritize social progress alongside economic growth to avoid stagnation. The Social Progress Index helps reframe the development debate, focusing on inclusive growth that truly enhances people's lives, not just GDP figures.

Keywords

💡GDP (Gross Domestic Product)

Gross Domestic Product is the total monetary value of all goods and services produced within a country's borders in a specific time period. The video emphasizes that while GDP has become the dominant measure of a country’s success, it is flawed in capturing the well-being of people and the social progress of a nation. The speaker argues that GDP ignores essential factors like happiness, fairness, and environmental impact.

💡Simon Kuznets

Simon Kuznets was the economist who developed the concept of GDP and delivered the 'National Income, 1929-1932' report to Congress. The video highlights that although Kuznets invented this tool, he warned that GDP should not be seen as a measure of a nation’s well-being. His warning was largely ignored, leading to the current overreliance on GDP as the main benchmark for success.

💡National Income Report

The 'National Income, 1929-1932' report, delivered by Simon Kuznets, provided crucial data during the Great Depression, helping policymakers understand the economic output of the U.S. economy. The speaker emphasizes that this report laid the foundation for the use of GDP as a standard metric globally, although it was never intended to measure well-being or social progress.

💡Social Progress Index

The Social Progress Index is introduced as an alternative measure to GDP, focusing on people's real quality of life. It assesses countries based on dimensions like basic human needs, foundations of well-being, and opportunity, measuring factors such as access to food, education, health, and rights. The video argues that this index better reflects the success of a country than economic growth alone.

💡Well-being

Well-being refers to the overall health, happiness, and quality of life of individuals in a society. The speaker asserts that GDP does not account for well-being, as it overlooks critical factors like environmental health, social justice, and personal fulfillment. The Social Progress Index is proposed as a better metric to measure societal well-being.

💡Environmental Impact

Environmental impact refers to the effect of economic activities on the natural world. The video criticizes GDP for ignoring environmental degradation, such as climate change and deforestation, and suggests that measuring progress in the 21st century should consider sustainability and the preservation of the environment for future generations.

💡Financial Crisis of 2008

The financial crisis of 2008 is used in the video to illustrate the limitations of GDP-focused economic policies. The speaker points out how an obsession with economic growth, as measured by GDP, led to reckless financial practices, contributing to the global financial meltdown. This crisis exemplifies the need for a broader measure of progress that includes social and environmental well-being.

💡Inclusive Growth

Inclusive growth refers to economic expansion that benefits all members of society, ensuring fairness and reducing inequality. The video promotes the idea that social progress and economic growth should go hand in hand, as a country can grow its GDP without improving social outcomes like equality, education, or healthcare access.

💡Basic Human Needs

Basic human needs include food, water, shelter, and safety, which are crucial for survival. The Social Progress Index begins by measuring whether societies are meeting these essential needs for all citizens. The video argues that focusing on these aspects is a more effective way of assessing societal success than relying on GDP alone.

💡Economic Growth

Economic growth refers to an increase in the production of goods and services in a country, typically measured by GDP. The video critiques the overemphasis on economic growth as a measure of success, highlighting that growth does not always lead to improved social outcomes or address environmental concerns, thus advocating for a more holistic approach to development.

Highlights

Simon Kuznets introduced the concept of GDP to measure national income in 1934, providing a tool for understanding economic performance during the Great Depression.

Despite the widespread use of GDP, Kuznets warned in his original report that it was not a measure of national well-being and should not guide all decision-making.

GDP has become the primary metric for judging the success of countries, yet it fails to account for environmental impacts, social fairness, and overall well-being.

The Social Progress Index (SPI) is introduced as an alternative measure that focuses on three key dimensions: basic needs, foundations for well-being, and opportunity.

SPI measures real outcomes such as life expectancy and freedom from discrimination, rather than inputs like healthcare spending or laws.

The report reveals a clear distinction between countries with high GDP but low social progress, and those with lower GDP but higher social progress, challenging the traditional reliance on GDP.

The SPI highlights that countries can achieve social progress even at lower levels of GDP, emphasizing the importance of inclusive and sustainable growth.

The correlation between GDP and social progress is strong for poorer countries, but becomes weaker as GDP increases, suggesting diminishing returns in terms of social progress.

Brazil is used as a case study to show that even with moderate GDP, significant social progress can be achieved, but prioritizing economic growth alone could lead to stagnation.

The subnational SPI for the Amazon region in Brazil provides detailed insights into the quality of life and can guide more effective development strategies.

The SPI can be applied at various levels, from countries to cities, making it a versatile tool for measuring and improving social progress.

Kuznets’ original warning about the limitations of GDP is reiterated, calling for new measurement tools to address 21st-century challenges like climate change and social inequality.

The vision for the 21st century is to measure contributions from nonprofits, businesses, and civil society to create a holistic view of societal progress beyond economic output.

There is a call to redefine success for countries, organizations, and leaders, focusing on real improvements in people's lives rather than just economic indicators.

The Social Progress Index aims to revolutionize how we measure societal success, urging collaboration across sectors to create a century of social progress.

Transcripts

On January 4, 1934,

a young man delivered a report

to the United States Congress

that 80 years on,

still shapes the lives of everyone in this room today,

still shapes the lives of everyone on this planet.

That young man wasn't a politician,

he wasn't a businessman,

a civil rights activist

or a faith leader.

He was that most unlikely of heroes,

an economist.

His name was Simon Kuznets

and the report that he delivered was called

"National Income, 1929-1932."

Now, you might think

this is a rather dry and dull report.

And you're absolutely right.

It's dry as a bone.

But this report is the foundation

of how, today, we judge the success of countries:

what we know best as Gross Domestic Product,

GDP.

GDP has defined and shaped our lives

for the last 80 years.

And today I want to talk about

a different way to measure the success of countries,

a different way to define and shape our lives

for the next 80 years.

But first, we have to understand

how GDP came to dominate our lives.

Kuznets' report was delivered

at a moment of crisis.

The U.S. economy was plummeting

into the Great Depression

and policy makers were struggling to respond.

Struggling because they didn't know what was going on.

They didn't have data and statistics.

So what Kuznet's report gave them

was reliable data on what the U.S. economy

was producing,

updated year by year.

And armed with this information,

policy makers were, eventually,

able to find a way out of the slump.

And because Kuznets' invention

was found to be so useful,

it spread around the world.

And now today, every country

produces GDP statistics.

But, in that first report,

Kuznets himself delivered a warning.

It's in the introductory chapter.

On page seven he says,

"The welfare of a nation can, therefore,

scarcely be inferred

from a measurement of national income

as defined above."

It's not the greatest sound bite in the world,

and it's dressed up in the cautious language of the economist.

But his message was clear:

GDP is a tool

to help us measure economic performance.

It's not a measure of our well-being.

And it shouldn't be a guide to all decision making.

But we have ignored Kuznets' warning.

We live in a world where

GDP is the benchmark of success

in a global economy.

Our politicians boast when GDP goes up.

Markets move

and trillions of dollars of capital

move around the world

based on which countries are going up

and which countries are going down,

all measured in GDP.

Our societies have become

engines to create more GDP.

But we know that GDP is flawed.

It ignores the environment.

It counts bombs and prisons as progress.

It can't count happiness or community.

And it has nothing to say about fairness or justice.

Is it any surprise that our world,

marching to the drumbeat of GDP,

is teetering on the brink of environmental disaster

and filled with anger and conflict?

We need a better way to measure our societies,

a measure based on the real things that matter to real people.

Do I have enough to eat?

Can I read and write?

Am I safe?

Do I have rights?

Do I live in a society where I'm not discriminated against?

Is my future and the future of my children prevented from environmental destruction?

These are questions that GDP

does not and cannot answer.

There have, of course,

been efforts in the past

to move beyond GDP.

But I believe that we're living

in a moment when we

are ready for a measurement revolution.

We're ready because we've seen,

in the financial crisis of 2008,

how our fetish for economic growth

led us so far astray.

We've seen, in the Arab Spring,

how countries like Tunisia

were supposedly economic superstars,

but they were societies

that were seething with discontentment.

We're ready, because today we have the technology

to gather and analyze data

in ways that would have been unimaginable to Kuznets.

Today, I'd like to introduce you to the Social Progress Index.

It's a measure of the well-being of society,

completely separate from GDP.

It's a whole new way of looking at the world.

The Social Progress Index

begins by defining what it

means to be a good society

based around three dimensions.

The first is, does everyone have the basic needs for survival:

food, water, shelter, safety?

Secondly, does everyone have

access to the building blocks to improve their lives:

education, information, health and sustainable environment?

And then third, does every individual have access

to a chance to pursue their goals

and dreams and ambitions

free from obstacles?

Do they have rights,

freedom of choice,

freedom from discrimination

and access to the the world's most advanced knowledge?

Together, these 12 components

form the Social Progress framework.

And for each of these 12 components,

we have indicators to measure how countries are performing.

Not indicators of effort or intention,

but real achievement.

We don't measure how much a country spends on healthcare,

we measure the length and quality of people's lives.

We don't measure whether governments pass laws against discrimination,

we measure whether people experience discrimination.

But what you want to know

is who's top, don't you? (Laughter)

I knew that, I knew that, I knew that.

Okay, I'm going to show you.

I'm going to show you on this chart.

So here we are,

what I've done here is put on the vertical axis social progress.

Higher is better.

And then, just for comparison,

just for fun,

on the horizontal axis is GDP per capita.

Further to the right is more.

So the country in the world

with the highest social progress,

the number one country on social progress

is New Zealand.

(Applause)

Well done! Never been; must go.

(Laughter)

The country with the least social progress,

I'm sorry to say, is Chad.

I've never been; maybe next year.

(Laughter)

Or maybe the year after.

Now, I know what you're thinking.

You're thinking, "Aha,

but New Zealand has a higher GDP

than Chad!"

It's a good point, well made.

But let me show you

two other countries.

Here's the United States —

considerably richer than New Zealand,

but with a lower level of social progress.

And then here's Senegal —

it's got a higher level of social progress than Chad,

but the same level of GDP.

So what's going on? Well, look.

Let me bring in the rest of the countries of the world,

the 132 we've been able to measure,

each one represented by a dot.

There we go. Lots of dots.

Now, obviously I can't do all of them,

so a few highlights for you:

The highest ranked G7 country is Canada.

My country, the United Kingdom,

is sort of middling, sort of dull,

but who cares —

at least we beat the French.

(Laughter)

And then looking at the emerging economies,

top of the BRICS, pleased to say, is Brazil.

(Applause)

Come on, cheer!

Go, Brazil!

Beating South Africa,

then Russia,

then China

and then India.

Tucked away on the right-hand side,

you will see a dot of a country with a lot of GDP

but not a huge amount of social progress —

that's Kuwait.

Just above Brazil

is a social progress superpower —

that's Costa Rica.

It's got a level of social progress the same as some Western European countries,

with a much lower GDP.

Now, my slide is getting a little cluttered

and I'd like to step back a bit.

So let me take away these countries,

and then pop in the regression line.

So this shows the average relationship

between GDP and social progress.

The first thing to notice,

is that there's lots of noise

around the trend line.

And what this shows,

what this empirically demonstrates,

is that GDP is not destiny.

At every level of GDP per capita,

there are opportunities for more social progress,

risks of less.

The second thing to notice

is that for poor countries,

the curve is really steep.

So what this tells us is that

if poor countries can get

a little bit of extra GDP,

and if they reinvest that

in doctors, nurses, water supplies,

sanitation, etc.,

there's a lot of social progress bang

for your GDP buck.

And that's good news, and that's what we've seen over the last 20, 30 years,

with a lot of people lifted out of poverty

by economic growth and good policies

in poorer countries.

But go on a bit further up the curve,

and then we see it flattening out.

Each extra dollar of GDP

is buying less and less social progress.

And with more and more of the world's population

living on this part of the curve,

it means GDP is becoming

less and less useful

as a guide to our development.

I'll show you an example of Brazil.

Here's Brazil:

social progress of about 70 out of 100,

GDP per capita about 14,000 dollars a year.

And look, Brazil's above the line.

Brazil is doing a reasonably good job

of turning GDP into social progress.

But where does Brazil go next?

Let's say that Brazil

adopts a bold economic plan

to double GDP in the next decade.

But that is only half a plan.

It's less than half a plan,

because where does Brazil want to go on social progress?

Brazil, it's possible

to increase your growth,

increase your GDP,

while stagnating or going backwards

on social progress.

We don't want Brazil

to become like Russia.

What you really want is for Brazil

to get ever more efficient at creating social progress from its GDP,

so it becomes more like New Zealand.

And what that means is that

Brazil needs to prioritize social progress

in its development plan

and see that it's not just growth alone,

it's growth with social progress.

And that's what the Social Progress Index does:

It reframes the debate about development,

not just about GDP alone,

but inclusive, sustainable growth

that brings real improvements in people's lives.

And it's not just about countries.

Earlier this year,

with our friends from the Imazon nonprofit here in Brazil,

we launched the first subnational Social Progress Index.

We did it for the Amazon region.

It's an area the size of Europe, 24 million people,

one of the most deprived parts of the country.

And here are the results,

and this is broken down

into nearly 800 different municipalities.

And with this detailed information

about the real quality of life

in this part of the country,

Imazon and other partners

from government, business and civil society

can work together to construct

a development plan

that will help really improve people's lives,

while protecting that precious global asset

that is the Amazon Rainforest.

And this is just the beginning,

You can create a Social Progress Index

for any state, region, city or municipality.

We all know and love TEDx;

this is Social Pogress-x.

This is a tool for anyone to come and use.

Contrary to the way we sometimes talk about it,

GDP was not handed down from God on tablets of stone. (Laughter)

It's a measurement tool invented in the 20th century

to address the challenges of the 20th century.

In the 21st century,

we face new challenges:

aging, obesity, climate change, and so on.

To face those challenges,

we need new tools of measurement,

new ways of valuing progress.

Imagine if we could measure

what nonprofits, charities,

volunteers, civil society organizations

really contribute to our society.

Imagine if businesses competed

not just on the basis of their economic contribution,

but on their contribution to social progress.

Imagine if we could hold politicians to account

for really improving people's lives.

Imagine if we could work together —

government, business, civil society, me, you —

and make this century the century of social progress.

Thank you.

(Applause)