A review of limitations of GDP and alternative indices to monitor human wellbeing and to manage eco-system functionality

Abstract The misuse of Gross Domestic Product as a measure of public wellbeing results from the idea that economic growth is always synonymous with enhanced quality of life, disregarding the fact that the economy profits from natural, social, and human capital. In order to monitor progress towards sustainability and increased well-being, governments working closely with scientists developed new metrics that go further than income and material wealth. There are several candidates for revisions of the Gross Domestic Product. Based on a comprehensive literature review, this paper identified several possible indicators that intend to adjust, supplement or substitute for Gross Domestic Product. Two main approaches were identified. The first uses Gross Domestic Product as foundation to build a complete index and includes proposals to greening Gross Domestic Product, socializing the indices and including it in a more comprehensive index. The second approach relates to efforts to redefine the indicators, with the use of environmentally oriented indicators and socially oriented measures. Challenges to measure development, welfare, and wellbeing are discussed to provide a wide-angle view of efforts to develop measures of social-economic-ecological status and progress beyond the current very narrow Gross Domestic Product. It was recognized an urgent need for guidance for the development of governance regimes designed to change from short-term decision-making processes to those, which support the multi-decade planning and implementation processes that are needed to guide the transition to post fossil carbon societies. This comprehensive review covers a wide range of topics, from problems of GDP to challenges and thoughts about indicators. The review shows that if mankind is concerned with the sustainable development of the planet as a whole, then progress indicators measured only in monetary or social terms are limited and restricted to the weak or the medium sustainability model, and must be complemented by biophysical indicators. It is time to change the global knowledge of what progress really is, changing the discussion from growth to sustainable development and human well-being.