Measuring Well-being — How Do We Know If We Are Better Off?

How do you know if you are better or worse off today than yesterday?  Than a year ago?  Than ten years ago?  More money in the bank?  More friends?  More memories?  Better health?  These measures we use to determine whether we are better off influence the decisions we make.

When we make a decision, Nobel Laureate Herbert Simon taught us that we use judgments about the future and about how to get there.  In all decisions, we have value judgments about a desired future, and we have factual judgments about the best way to get there.  How we measure what we value in the future guides what we do to get there.  Said another way, how you measure “better off” matters, as it provides the incentives for what you do.

As we have explored in previous posts, you can define the vibrancy you experience in what you value at the things-noun level, the development-verb level, the possibility-light level, and some interweaving of the three levels.  And, we saw that what you value in your experience is very different at each level of perceived reality, from the things you have in this moment to the experience to the potential to the living with all three levels.

The economic systems that influence much of our daily life are guided by similar values of “better off,” using indicators to tell us whether we are better off and to guide the decisions we make.  One of the main indicators we use globally is Gross Domestic Product (GDP).  GDP sums up all of the monetary transactions in a country, indicating the volume of value exchange in a given time period.  More value exchange indicates more capacity to produce and acquire goods and services.  This is good.  It is a good indicator of the things-noun level of value experienced.  It says nothing about the development-verb level, the possibility-light level, or the interweaving of the three.

To expand the measure of well-being beyond the sum of monetary transactions, many systems are emerging, peaking into the broader experience of interweaving possibility-light, development-verb, and things-noun levels.  I highlight two here for you to explore.

  1. Better Life Index.  Documented by the OECD, this index explores your experience of different aspects of life, including housing, education, income, employment, community, and environment.  On their website, you can assign your own values to these indicators.  This index describes a broad range of experiences and, given the focus on your experience of living with these aspects, it describes both the things-noun level and early development-verb levels of your experience.
  2. Inclusive Wealth Index.  Collected by the UNEP/IHDP, this index assesses a country’s manufactured, human, and natural capital assets.  It assesses the sustainability and inclusiveness of the capital assets by looking at how they are managed for short-term benefit, while sustaining the resources for the long-term.  This index looks at both the sustainable development-verb level of resources, and their immediate use at the things-noun level.

If you have other indices you know of that are exploring the interweaving of value experienced at the light, verb, and noun levels, please share them here in your comments.

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3 thoughts on “Measuring Well-being — How Do We Know If We Are Better Off?

  1. Pingback: Ecosynomics: The Agreements Guiding Human Interacions (free online course) | Institute for Strategic Clarity

  2. Pingback: Seeing “What Is” — The Economics of Abundance « Jim Ritchie-Dunham

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