Achieving Wellbeing Without Growth

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Jason Hickel:

"Existing empirical evidence demonstrates that it is possible to achieve high social indicators without high levels of GDP per capita. Past a certain point, the relationship between GDP per capita and social indicators begins to break down. Take life expectancy, for instance; while there is a general correlation between GDP per capita and longevity (countries with higher GDP per capita generally have better life expectancy), the relationship follows a saturation curve with sharply diminishing returns (Preston, 2007; Steinberger & Roberts, 2010). Longevity depends on other important variables besides GDP, such as investment in universal healthcare.

For example, Costa Rica’s healthcare system allows the country to match US life expectancy with only one-fifth of the US GDP per capita (Sánchez-Ancochea and Martínez Franzoni, 2016). Similarly, there is a tenuous relationship between GDP per capita and happiness, or well-being (see Easterlin, 1995; Easterlin et al., 2010). In the United States and the United Kingdom, for instance, happiness levels have remained unchanged since the early 1970s, despite significant growth in real GDP per capita. According to the Gallup World Poll, many countries (Germany, Austria, Sweden, Netherlands, Australia, Finland, Canada, Denmark, and most notably Costa Rica) have higher levels of well-being than the United States does, with less GDP per capita. The same pattern applies to many other social indicators. The GDP per capita of Europe is 40% lower than that of the US, and yet Europe performs better in virtually every social category, as European countries tend to be more equal and more committed to public goods. But even European countries have significant room for improvement. Inequality in Europe has worsened significantly since 1980. From a degrowth perspective, this represents an opportunity: there is no a priori reason why Europe’s social performance cannot be improved still further – without any additional growth – by distributing existing income more fairly and using progress taxation to expand public goods. It is not just that GDP is not strongly correlated with human development after a point – it is also that GDP growth past a certain threshold tends to have a negative impact. Alternative metrics of economic progress, such as the Genuine Progress Indicator (GPI), make this effect visible. GPI starts with personal consumption expenditure (also the starting point for GDP)and adjusts using 24 different components, such as income distribution, environmental costs and pollution, while adding positive components left out of GDP, such as household work. Kubiszewski et al. (2013) find that in most countries GPI grows along with GDP until a particular threshold, after which GDP continues to grow while GPI flattens and in some cases declines. The authors draw on Max-Neef (1995) to interpret this threshold as the point at which the social and environmental costs of GDP growth become significant enough to cancel out consumption-related gains (Deaton, 2008; Inglehart, 1997).Of course, one might argue that economic growth is necessary for mobilizing resources to invest in the technological change required to shift the world toward sustainability. But there is no evidence for the assumption that aggregate growth is necessary for achieving this. If the objective is to achieve specific kinds of technological innovation, it would make more sense to invest in those directly, or incentivize innovation with policy measures (e.g., caps on carbon and resource use), rather than to grow the whole economy indiscriminately (which would include growth of dirty and destructive industries) while blindly hoping for a specific outcome." (