Our two leading national indicators of success – the Dow Jones and the GDP – are out of touch with American reality.
Just last month the Dow Jones Industrial Average (a composite index of the stock value of 30 large companies) hit an all-time high, having about doubled in the past 5 years. Yet for most Americans it doesn’t feel like prosperity has doubled in the past 5 years.
And in spite of the recent covid drop, the GDP (Gross Domestic Product: the value of all goods and services sold in a specific time period) has also steadily increased over the past five years.
By the GDP measure, America looks like the biggest and the best in the world. A staggering 24% of the global economy is right here. Yet also right here we have higher poverty rates and higher infant mortality rates than almost any other developed country in the world. And we pollute more per person than in any other country. According to these and other broader measures of quality of life, it doesn’t feel to me like we are better off here than in other places.
Rather than hearing and reading about the Dow Jones and GDP* all the time, I would rather we looked at a broader set of indicators, perhaps rolled into an index (several measures mathematically combined into a single number).
The World Happiness Report combines 33 indicators from the following 9 domains into a single index: Living standards, Education, Health, Ecological diversity and resilience, Good governance, Time use, Cultural diversity and resilience, Community vitality, Psychological well being.
According to the latest index, the United States ranks 18th in the world in terms of happiness.
Instead of focusing so intently on initiatives to boost the economic numbers, I think Americans would be happier if we paid more attention to public health, community building, environmental protection, and other things known to contribute to happiness.
* Whenever news sources talk about economic growth or the size of “the economy,” they are talking about GDP.
Data Sources: GDP History, GDP Comparison, Poverty, Infant Mortality, Pollution.