Actually, global society has got a lot better off over the last 30 years

I was surprised to see a recent article on the Crawford web site making the depressing claim that “over the last three decades global society has grown richer but not better off.” According to the latest World Bank poverty report, the number of people living lives of extreme deprivation (with consumption below $1.25 a day) had fallen from over 1.9 billion in 1980 to about 1.2 billion in 2010. This is particularly impressive given the growth in the world’s population over this period. The global poverty rate has more than halved from 43% to 19%.

The 2013 Human Development Report gives an even more positive message. Writing about the last 20 years, it argues: “Never in history have the living conditions and prospects of so many people changed so dramatically and so fast.” (p.11)

Over summer, I read Charles Kenny’s recent book Getting Better. This tells a number of interesting, very positive stories about progress in global welfare over the last few decades:

  • 80% of countries for which we have data have seen infant mortality more than halve between 1960 and 2005 (p. 78)
  • Literacy rates in sub-Saharan Africa increased from 28% to 61% between 1970 and 2000 (p. 80)
  • The global trend is away from autocracy towards respect for civil and political rights. (p.87)
  • The number of major civil and international wars being fought declined from 26 to 4 between 1991 and 2005. (p. 88)

So where does this idea that global society has not got better off over the last three decades come from? The claim on the website is based on research recently published in Ecological Economics by my respected colleagues, Ida Kubiszewski and Robert Costanza. With their co-authors, they use an indicator of welfare called the Genuine Progress Indicator. GPI adjusts GDP per capita for various quality of life and environmental factors such as intra-country income distribution, crime and pollution. What they show is that “By this measure, economic welfare at the global scale has not been improving since 1978.”

Whether GDP or GPI per capita is a better measure of economic welfare or welfare more broadly is a matter of debate. My colleagues think GPI per capita is better. One test is to look at which measure better captures the revolutionary improvements in global welfare over the last few decades. By that test, GDP per capita comes out a long way ahead.

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Stephen Howes

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

3 Comments

  • This is obviously a complicated and important topic and it can’t be easily summarized with one-liners like: “1978 was the best year ever” or “global society has got a lot better off over the last 30 years.”

    I encourage you all to read the full paper, which compares a range of indicators for the 17 countries for which GPI has been estimated.

    Certainly some things have improved, like the ones Steve mentions, but GDP misses most of those too along with other positive things like volunteer and household work and leaves out major environmental and social costs. The HDI also leaves out social and environmental costs and benefits, although there are efforts now underway to fold some of them in.

    Anyway, listing only the positives without also accounting for the negatives (as GDP tends to do) is a major accounting problem. Can you imagine running a business that only looked at gross receipts?

    There is growing recognition that focusing too much on GDP as a policy goal is a major mistake. See, for example, this recent book by Nobel prize winners Joe Stiglitz and Amarta Sen: Stiglitz, J. E., A. Sen and J. P. Fitoussi (2010). Mismeasuring our lives: Why GDP doesn’t add up. New York, The New Press

    We certainly don’t claim that GPI is the perfect indicator, but it does try to account for some of the more important negatives and it shows no NET gain globally since 1978 (while some countries and regions are still improving and others declining on net). This is a compelling result, because it contradicts the general perception that Steve has voiced.

    GDP was never designed to measure social well-being and its time we stopped using it as a proxy for that. GPI is a step in the right direction, but certainly just one small step and hopefully not the last step.

  • Nice post, Stephen. I agree with your points.

    It seems to me that some aspects of the GPI are not really directly relevant for current well-being. For example, most of the damage from CO2 emissions is likely to occur in the future, so it is hard to see how this affects current well-being. (CO2 emissions are more relevant for a measure of “sustainability”.) If the (cumulative) cost of CO2 emissions is excluded from the US GPI calculation, US GPI per capita has actually increased rapidly.

  • I’m not a fan of GPI, but it seems you are presupposing the answer here. I don’t think Costanza et al. doubt that many dimensions of welfare have improved over time. They just argue that the other factors outweigh those.

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