What’s the best country to live in?

Summary

The video script explores the limitations of Gross Domestic Product (GDP) as a measure of a country's well-being, highlighting its inability to account for the quality of life and distribution of wealth. It introduces alternatives like Bhutan's Gross National Happiness, which considers health, education, and community, and the United Nations' Human Development Index, which includes health, education, and income. Costa Rica is praised for balancing economic growth with sustainability. The script concludes that a 'dashboard' approach, considering multiple factors, is more effective than a single metric for assessing well-being.

Takeaways

• 💡 GDP was invented by Simon Kuznets in the 1930s to measure the size of an economy in a single number.
• 🌍 GDP is the total monetary value of everything a country produces and sells on the market.
• 🧐 GDP per capita is often used as a measure of well-being, but it doesn't directly reflect the well-being of a country's citizens.
• 🔢 GDP does not account for what a country produces or who has access to it, treating all goods and services equally regardless of their societal value.
• 📉 From the 1980s, GDP growth did not correlate with wage growth, leading to wealth inequality.
• 🎉 Bhutan introduced Gross National Happiness as an alternative to GDP, focusing on health, education, community, and living standards.
• 🌟 The United Nations' Human Development Index includes health, education, and income per capita to estimate overall well-being.
• 🌱 The Sustainable Development Index considers both well-being and the environmental impact of economic growth.
• 🌴 Costa Rica is highlighted as a country that has managed to improve living standards without drastically increasing emissions, aligning with sustainable development.
• 📊 Experts are moving towards a dashboard approach that presents multiple factors instead of relying on a single number to measure well-being.
• 🤔 The best country to live in is subjective and depends on individual values and priorities.

Q & A

What is the Gross Domestic Product (GDP) and why was it created?

Gross Domestic Product (GDP) is the total monetary value of everything a country produces and sells on the market. It was invented by economist Simon Kuznets in the 1930s to gauge the size of an economy in a single, easy-to-understand number.

How does GDP per capita relate to well-being, and what are its limitations?

GDP per capita is the total GDP divided by the number of people in a country and is widely seen as a measure of well-being. However, it has limitations because it doesn't account for what a country produces or who has access to it, nor does it include non-market services like public schools or firefighters.

What is the difference between GDP and the value of public services such as education and healthcare?

GDP does not count the value of public services like education and healthcare because these services are not sold on the market. This means that investments in social welfare do not directly contribute to a country's GDP.

How has the relationship between GDP growth and wages changed from 1945 to 1970 and then to the 1980s?

From 1945 to 1970, as GDP doubled, tripled, or quadrupled in some western economies, people's wages often grew proportionally. However, by the 1980s, countries continued to grow richer, but wages stopped keeping pace with GDP growth, and in some cases, declined.

What is the concept of Gross National Happiness (GNH) proposed by King Jigme Singye Wangchuk of Bhutan?

Gross National Happiness (GNH) is an alternative to GDP that factors in matters like health, education, strong communities, and living standards. It includes subjective measures such as citizens' perceptions of their family's happiness and knowledge of local flora and fauna.

What is the United Nations' Human Development Index (HDI) and how does it differ from GDP?

The United Nations' Human Development Index (HDI) is a metric that takes into account health, education, and income per capita to estimate overall well-being. Unlike GDP, which only measures economic output, HDI considers the quality of life and human development.

What is the Sustainable Development Index and how does it consider both well-being and environmental impact?

The Sustainable Development Index is a metric that factors in both well-being and the environmental burdens of economic growth. It aims to provide a more holistic view of a country's progress by considering ecological sustainability alongside traditional economic measures.

Why does Costa Rica stand out in terms of sustainable development and well-being?

Costa Rica stands out because it has managed to grow its economy and improve living standards substantially without drastically increasing its emissions. It comes closest to meeting the basic needs of its people while using resources sustainably.

What are the limitations of using a single number to measure the quality of life in a country?

Using a single number to measure the quality of life in a country has limitations because it cannot capture the complexity and diversity of factors that contribute to well-being. It may also obscure important details and nuances that are crucial for understanding a country's true situation.

What is the 'dashboard approach' to measuring well-being and why is it favored by experts?

The 'dashboard approach' involves laying out all the factors that contribute to well-being rather than reducing them to a single number. Experts favor this approach because it provides a more comprehensive and nuanced understanding of a country's well-being, taking into account various priorities and aspects of life.

How does personal values influence the design of a country's well-being metric?

Personal values greatly influence the design of a country's well-being metric because different people prioritize different aspects of life. A well-being metric should reflect the values and priorities of the society it represents, making it a more accurate measure of what truly matters to the people.

Outlines

00:00

📊 GDP and Its Limitations

The script discusses the Gross Domestic Product (GDP) as a traditional measure of a country's economic success and its limitations. GDP, introduced by economist Simon Kuznets in the 1930s, is the total value of goods and services produced and sold by a country. It has been a significant influence on elections, stock markets, and government policies. However, the script points out that GDP does not account for what is produced or who has access to it, treating all goods equally regardless of their societal value. For example, weapons contribute the same to GDP as vaccines or food. Additionally, public services like education and firefighting are not included because they are not sold on the market. GDP per capita also fails to reflect the distribution of wealth within a country, potentially giving a misleading picture of an average citizen's wealth. Despite these shortcomings, higher GDP historically correlated with a higher quality of life, but this relationship changed in the 1980s when wage growth decoupled from GDP growth, leading to increased income inequality.

🌐 Alternatives to GDP

The video script introduces alternatives to GDP that aim to provide a more holistic view of well-being. In 1972, Bhutan's King Jigme Singye Wangchuk proposed Gross National Happiness (GNH), which includes factors such as health, education, community strength, and living standards. GNH involves citizens in assessing their happiness and knowledge about their local environment. The United Nations' Human Development Index (HDI) is another metric that considers health, education, and income per capita to estimate overall well-being. The Sustainable Development Index (SDI) further incorporates environmental impacts of economic growth, attempting to balance well-being with sustainability. Costa Rica is highlighted as a country that has managed to grow its economy and improve living standards without significantly increasing emissions, thus coming close to meeting the SDI criteria. The script concludes by emphasizing the limitations of any single-number metric and suggests a dashboard approach that presents a range of factors, acknowledging the diverse priorities of different individuals.

Keywords

💡Gross Domestic Product (GDP)

GDP is an economic measure that represents the total monetary value of all finished goods and services produced within a country's borders in a specific time period. In the video, GDP is highlighted as a widely used but flawed indicator of a country's well-being and economic health. It is criticized for not reflecting the quality of what is produced or the distribution of wealth, as a million dollars of weapons would contribute the same to GDP as a million dollars of vaccines or food.

💡Simon Kuznets

Simon Kuznets was an economist who invented the concept of GDP in the 1930s. His intention was to provide a single, easy-to-understand number that could gauge the size of an economy. The video mentions Kuznets as the creator of GDP, indicating that the metric was never intended for the broad and impactful uses it has today.

💡GDP per capita

GDP per capita is calculated by dividing a country's total GDP by its population. It is often used as a measure of individual economic well-being within a country. The video points out that while it is a common measure, it can be misleading because it does not account for wealth distribution, giving a skewed view of the average citizen's economic situation.

💡Well-being

Well-being in the context of the video refers to the overall quality of life and happiness experienced by individuals within a country. It is the broader concept that GDP and other metrics attempt to measure. The video discusses the limitations of GDP in capturing well-being, suggesting that it does not consider factors such as health, education, and environmental sustainability.

💡Gross National Happiness (GNH)

GNH is an alternative metric to GDP, proposed by King Jigme Singye Wangchuk of Bhutan in 1972. It aims to measure the happiness and well-being of a country's citizens by taking into account factors like health, education, and community strength. The video presents GNH as a more holistic approach to assessing a nation's prosperity, moving beyond just economic output.

💡Human Development Index (HDI)

The HDI is a composite index that measures key dimensions of human development, including health, education, and income per capita. The video mentions HDI as a more widely used metric that attempts to provide a more comprehensive view of well-being than GDP alone, by incorporating factors that contribute to a good life.

💡Sustainable Development Index

The Sustainable Development Index is a metric that considers both the well-being of a population and the environmental impact of economic growth. The video notes that this index attempts to balance the desire for improved living standards with the need for environmental sustainability, which is a critical aspect often overlooked by traditional economic measures like GDP.

💡Costa Rica

Costa Rica is highlighted in the video as a country that has managed to grow its economy and improve living standards without drastically increasing its emissions, making it a leader in sustainable development. The country is praised for its efforts to balance economic growth with environmental responsibility, which is a key aspect of the Sustainable Development Index.

💡Dashboard approach

The dashboard approach, as discussed in the video, is a method of evaluating a country's well-being by considering a variety of factors rather than relying on a single metric. This approach recognizes that different people value different aspects of life, and it aims to provide a more nuanced and comprehensive understanding of a country's overall well-being.

💡Quality of life

Quality of life refers to the general well-being and satisfaction of individuals in their daily lives, encompassing factors such as health, safety, education, and economic security. The video suggests that traditional economic measures like GDP have limitations in capturing the nuances of quality of life, and alternative metrics or approaches may provide a more accurate reflection.

💡Wealth distribution

Wealth distribution refers to how wealth is shared among the members of a society. The video points out that GDP per capita can be misleading because it does not account for how wealth is distributed within a country. A high GDP per capita might suggest prosperity, but if wealth is concentrated among a few, the majority of the population might not experience this prosperity.

Highlights

Gross Domestic Product (GDP) is a widely used but flawed measure of a country's well-being.

GDP was invented by economist Simon Kuznets in the 1930s to gauge the size of an economy.

GDP measures the total monetary value of everything a country produces and sells on the market.

GDP per capita is often used as a measure of well-being but doesn't directly reflect it.

GDP does not account for what a country produces or who has access to it, leading to inaccuracies.

Public services like schools and firefighters are not counted in GDP as they are not market goods.

GDP per capita can give a distorted view of a country's wealth distribution.

From 1945 to 1970, higher GDP correlated with higher wages and quality of life in many countries.

After the 1980s, wage growth stopped keeping pace with GDP growth, leading to wealth inequality.

Gross National Happiness (GNH) was introduced by Bhutan as an alternative to GDP.

GNH includes factors like health, education, strong communities, and living standards.

The United Nations' Human Development Index (HDI) is a more widely used metric, considering health, education, and income.

The Sustainable Development Index combines well-being and environmental impacts of economic growth.

Costa Rica is recognized for its sustainable economic growth and improved living standards without drastically increasing emissions.

Colombia and Jordan have also made progress in sustainable development and well-being.

Costa Rica has better life expectancy outcomes than some of the world's richest countries.

Experts prefer a dashboard approach that presents multiple factors rather than a single number to measure well-being.

The best country to live in depends on individual priorities and values.

Transcripts

What’s the best country in the world to live in?

Is it the one with the best food? The longest life expectancy?

The best weather?

For the past 70 years, most governments have relied heavily on a single number

to answer that question.

This number influences elections, the stock market, and government policy.

But it was never intended for its current purpose;

and some would argue that the world is addicted to making it grow... forever.

This number is called the Gross Domestic Product, or GDP,

and it was invented by the economist Simon Kuznets in the 1930s,

to try and gauge the size of an economy in a single, easy to understand number.

GDP is the total monetary value of everything a country

produces and sells on the market.

To this day, GDP per capita,

which is just the total GDP divided by the number of people living in that country,

is widely seen as a measure of well-being.

But GDP doesn’t actually say anything direct about well-being,

because it doesn't take into account what a country produces

or who has access to it.

A million dollars of weapons contributes the exact same amount to a country’s GDP

as a million dollars of vaccines or food.

The value society derives from things like public school or firefighters

isn’t counted in GDP at all, because those services aren’t sold on the market.

And if a country has a lot of wealth,

but most of it is controlled by relatively few people,

GDP per capita gives a distorted picture of how much money a typical person has.

Despite all that, for a long time,

higher GDP did correlate closely to a higher quality of life

for people in many countries.

From 1945 to 1970, as GDP doubled, tripled or even quadrupled

in some western economies,

people’s wages often grew proportionally.

By the 1980s, this changed.

Countries continued to grow richer,

but wages stopped keeping pace with GDP growth,

or in some cases, even declined,

and most of the benefits went to an ever-smaller percentage of the population.

Still, the idea of capturing a nation’s well-being in a single number

had powerful appeal.

In 1972, King Jigme Singye Wangchuk of Bhutan

came up with the idea of Gross National Happiness

as an alternative to Gross Domestic Product.

Gross National Happiness is a metric that factors in matters

like health, education, strong communities, and living standards,

having citizens answer questions like,

“How happy do you think your family members are at the moment?”

“What is your knowledge of names of plants and wild animals in your area?”

and “What type of day was yesterday?”

The United Nations’ Human Development Index is a more widely used metric;

it takes into account health and education,

as well as income per capita to estimate overall well-being.

Meanwhile, a metric called the Sustainable Development Index

factors in both well-being and the environmental burdens of economic growth,

again, boiling all this down to a single number.

Though no country has been able to meet

the basic needs of its people while

also using resources fully sustainably,

Costa Rica currently comes the closest.

Over the past few decades,

it’s managed to grow its economy and improve living standards substantially

without drastically increasing its emissions.

Other countries, like Colombia and Jordan,

have made notable progress.

Costa Rica now has better well-being outcomes like life expectancy

than some of the world’s richest countries.

Ultimately, there are limits to any approach that boils

the quality of life in a country down to a single number.

Increasingly, experts favor a dashboard approach that lays out all the factors

a single number obscures.

This approach makes even more sense given that people have different priorities,

and the answer to which country is best to live in

depends on who’s asking the question.

So what if that were you designing your countries well-being metric?

What do you value, and what would you measure?