There is more to happiness than raw economic growth. What happens when you measure countries by employment, health care, and life satisfaction? The United States and Europe run in opposite directions.
The pursuit of happiness is one of America's promises to its citizens, enshrined in the Declaration of Independence. But today, Americans are a profoundly unhappy people. Their sour mood in the wake of the Great Recession reflects growing disillusionment with the exceptionalism of the American Dream and a widespread sense that the United States is in decline. The perceived fall from greatness, and who is to blame for it, are already shaping up as major themes for the 2012 campaign.
"Many in Washington--including the president--are really arguing over how best to manage the decline of our nation," Rep. Paul Ryan, R-Wis., the House Budget Committee chairman, charged in an early salvo last month.
But a very narrow set of objective economic indicators will fuel much of the debate over the United States' stature: annual growth of the gross domestic product, unemployment, and overall wealth. As it happens, the country's performance based on these metrics is remarkably good compared with other major industrial nations. Although the public gloom reflects doggedly high unemployment, it doesn't fully explain the broader sense of a national slide in stature. Looking at a wider array of measures about the quality of life may better explain that uneasiness.
One early version of such a tool now exists, just in time to help frame--and perhaps inform--the 2012 election debate about American exceptionalism.
In late May, the Organization for Economic Cooperation and Development, the Paris-based think tank supported by 34 industrialized nations, released its first-ever Your Better Life Index. The interactive database compares member countries along 11 separate lines, from indicators of wealth and income to measures of health, education, personal fulfillment, and leisure time. The goal, OECD officials say, is to help people identify their preferences and encourage public debates within countries about the broadest meaning of well-being.
"People around the world have wanted to go beyond GDP for some time," the organization's secretary-general, Angel Gurria, said. "This index is designed for them. It has extraordinary potential to help people help us deliver better policies for better lives."
AMERICA IN DECLINE?
Republican presidential wannabes are already championing the exceptionalism of American life with a fervency that suggests they doth protest too much. Undeclared GOP presidential hopeful Mitt Romney has titled his new book, No Apology: The Case for American Greatness. Sarah Palin told an audience in Colorado last month that "America is not in decline. [There is] not a need for a fundamental transformation of America." There are many measures of success and decline, however. The U.S. economy is still the largest and wealthiest in the industrialized world. Relative to Europe and Japan, the United States is recovering quite well from the Great Recession. The International Monetary Fund expects America's economy to grow 2.8 percent this year, much better than the 1.8 percent expansion that the IMF forecasts for the European Union or the 1.4 percent it foresees in Japan. The U.S. is likely to outperform both of those economic rivals at least through 2016. Moreover, America ranks first in global competitiveness, up from third last year, in the International Institute for Management Development's annual ranking of nations' economic performance. That determination is based on an array of measures that include public finances, productivity, education, and basic infrastructure.
Nevertheless, China's economy is now expected to be larger than America's by 2016, thanks to years of stronger growth. The IMF foresees unemployment in the United States averaging 8.5 percent through 2011, about 2 points higher than joblessness in Germany and 4 points higher than in Japan. The U.S. government's deficit will remain close to 11 percent of the economy, higher than that of Japan and more than four times that of Germany. On its current trajectory, the federal debt will equal 90 percent or more of U.S. gross domestic policy by 2020, many analysts predict.
Given the trauma of the past several years, it's not a surprise that many Americans embrace a declinist worldview rather than an exceptionalist vision. In a November 2010 Allstate/National Journal Heartland Monitor poll, only 20 percent of Americans thought that the United States had the world's strongest economy. More than twice as many, 47 percent, picked China. Asked which nation will have the best economy two decades from now, 37 percent chose China and 34 percent the United States. In the latest Heartland Monitor survey, taken last month, 58 percent of Americans thought that the country was on the wrong track. (See "Race to the Top.")
In terms of its raw economic size and wealth, the United States is still No. 1. But America is doing poorly in managing its finances and creating jobs, a fact not lost on its citizens.
THE PURSUIT OF HAPPINESS
Money isn't everything, of course, and purely economic metrics are, at best, limited indicators of national well-being. Just ask any Washingtonian stuck on the Capital Beltway at rush hour. Traffic jams increase gasoline consumption, which shows up in economic data as a plus for the GDP, but they obviously don't improve the quality of life. Ill health can have the same effect, with increased spending and "production" of medical services reflected as a positive for the economy.
"The commonly accepted standard of social progress, GDP, is seriously deficient," said Richard Easterlin, an economics professor at the University of Southern California. "Instead of GDP, measures relating to the multiple dimensions of well-being, not just material gains, should be used in policy decisions and welfare evaluations."
To that end, in 2008, French President Nicolas Sarkozy asked three
prominent economists--Joseph Stiglitz and Amartya Sen, both Noble Prize
winners, and Jean-Paul Fitoussi--to lead a commission to consider better
measures of social progress. Their report called for a sea change in
the way that economists and politicians think about the benefits of
economic growth. They rejected the sole reliance on traditional economic
measures and pushed for a broader array of quality-of-life
indicators--people's health, education, and personal satisfaction, as
well as a community's environmental quality. Widening the lens on life,
they argued, would lead to better evaluations of public well-being and,
"What we measure affects what we do," the three economists concluded, "and if our measurements are flawed, decisions may be distorted."
The OECD's Your Better Life Index is an attempt to translate that vision into practice. The initiative includes objective quantitative indicators, such as life expectancy, unemployment, and household income, as well as subjective measures, such as peoples' perceptions of their own health, sense of community, and life satisfaction.
"We don't want to replace GDP," said Martine Durand, the OECD's chief statistician. "It's just that GDP doesn't capture all aspects of how people measure their lives."
The organization hopes that if citizens have a means of judging the broad success of their societies--from economic growth to work-life balance--they will hold their governments to a higher standard. "If you tell elected officials what is in the test, they will study for the test," one senior OECD official wryly observed.
The OECD began wrestling with these concepts seven years ago and recently decided to pull them all together, timed for release during the organization's 50th year and, serendipitously, during Sarkozy's year as leader of the G-20 group of the world's leading economies.