In Iceland, well-being is the measure of our success

Katrín Jakobsdóttir
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Katrn Jakobsdttir3 January 2020

Future generations will ask what today’s decision-makers did to prevent the many catastrophes deriving from climate change. There may be more appealing responses than this one: “we developed indicators”. Yet, new indicators on economic results might be just what the world needs.

Despite the well-documented shortcomings of centring economic policy on gross domestic product (GDP), this is still the main barometer of economic and societal success. It has resulted in a cycle of wasteful consumption, creating the need to produce in order to get by and to consume for the sake of production. The defining power of GDP is so immense that if it was removed at the stroke of a pen, it would upend national economies as well as the international system.

This has prompted calls on both sides of the Atlantic for a Green New Deal, seeking inspiration from Franklin Roosevelt’s 1930’s New Deal and from social projects in Europe in the wake of the Great Depression and after World War II. This includes the NHS, social housing in France and the Nordic welfare models, all of which were big and bold ideas, designed to serve the common good. Yet, as the call for big solutions lead to debates on content, costs and implementation, the incremental steps of responding to global challenges should still not be delayed. We should take them wherever possible.

The wellbeing government economy project – where Iceland is participating with among others New Zealand and Scotland – is an attempt to develop a new economic model, which is centred on wellbeing rather than on production and consumption. Reinforced by the OECD, the idea is not revolutionary in the sense it still focuses on the measurable. Yet, developing wellbeing indicators has the potential to transform fiscal policies, putting people and the planet first.

Iceland has developed 39 wellbeing indicators that include economic, environmental and social factors. GDP and other economic indicators are among them, but in a new context with social and environmental indicators, to aim for the delicate balance of sustainable development. A wellbeing budget is in the works, using the expertise from gender budgeting, which Iceland adopted first in 2010. A number of priorities have been identified and each category offers measurable indicators. This includes the reduction of carbon emissions (very quantifiable!) and improvement of mental health.

Our generation has no option but to change the way we live. There is only one planet and we share it. This is, therefore, a collective effort. The wellbeing economy project demands new reasoning, consisting of many of the same key ingredients that are manifested in proposals on Green New Deals on both sides of the Atlantic. It can transform the economic thinking of the 21st century and open up possibilities for a globally-coordinated social response to climate change.

  • Katrín Jakobsdóttir is Prime Minister of Iceland

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