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Measuring a Better Life

Posted: 06/29/11 12:15 PM ET

How do you define a better life? The Organisation for Economic Cooperation and Development (OECD), a group of 34 countries comprised chiefly of the world's affluent democracies, is taking its turn to answer this ageless question with its Better Life Initiative. This interactive tool and index draws attention to the many ingredients of a good life, and in so doing attempts to move beyond GDP as the sole measure of a country's well-being. According to data released last Friday, U.S. GDP increased at a rate of 1.9 percent in the first quarter of 2011, although many Americans may have missed that news while searching for a job or fighting foreclosure. Moreover, from 1975 to 2009, America's GDP nearly tripled while median personal income for Americans inched up. It's no surprise then that GDP, which the OECD has used since its formation in 1961, is no longer the first place economists, policymakers, and individuals go to answer the question "how are people really doing?"

The OECD's initiative marks a milestone for the post-GDP movement. Its decision to take into account indicators like housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety, and work-life balance -- all of which are important to understanding people's quality of life as opposed to just the size of the economy -- is admirable. The ability to compare the United States to the 33 other OECD countries on important social and economic measures will be globally valuable.

While the overall U.S. statistics tell an interesting story (we're ranked #6 on the Better Life Index, as opposed to #1 on GDP), it's only when you look beneath the national averages that you can begin to understand the challenges facing America. The Better Life Index is a great jumping point for discussion, but it can't be used for policymaking in the U.S. In most of the areas measured by the OECD, policy is made at -- and varies widely by -- the state and local level.

Where the Better Life Index takes a telling and important snapshot at 30,000 feet, the American Human Development (HD) Index uses a microlens. Based on the internationally renowned Human Development Index, which was developed by the United Nations and is used in more than 160 countries, the American HD Index uses government statistics to measure education, health, and standard of living. What results is a composite number representing well-being and access to opportunity.

The AHDI ranks well-being on a scale of 0 to 10 and can be analyzed by state, congressional district, major metropolitan area, neighborhood groups, gender, race, and ethnicity. The AHDI augments other indices like the OECD's by determining where people within the country are today and setting a benchmark for progress in the future. Philanthropic organizations and social service providers are using the index to determine need, and policymakers are using it to allocate funds; as the approach gains traction in the United States, individuals can use it to hold their elected officials accountable.

Given America's skyrocketing debt, diminishing revenue, and stagnating economy, well-being for Americans of all developmental levels is at risk. If we can't make the pie bigger in the short-term, the American HD Index offers a fact-based, nonpartisan tool for policymakers and individuals alike to determine how to cut the pie more effectively, in a manner that removes constraints and improves opportunities for all Americans.

 

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