How to measure a good life – tips for moving beyond GDP

## Summary
The aim is to produce a more-inclusive set of national income and wealth accounts that better capture where goods and services are being created in modern societies. Credit: Atlantide Phototravel/Getty Specifically, four classes of capital stock are excluded from national accounts: human capital (such as education, skills and health); several intangible capitals (such as organizational capital and training); household durables (such as fridges, freezers, washing machines, home computers and cars); and natural capital not involved in conventional production (such as wetlands, forests and biodiversity). It builds on gross domestic product (GDP) through: • Quality adjustment of public-service output, which is a statistical method used to measure changes in the quality, effectiveness and outcomes of government services (such as health and education) rather than just the quantity of activities (such as number of patients treated); • Unpaid household services; • Ecosystem services, including greenhouse-gas, air-pollution and urban-heat regulation; • A wider set of intellectual-property products, or intangible investment, to include those that are currently not associated with capital in the national accounts. It builds on GII by: • Subtracting the consumption and depreciation of fixed assets, including of intangible capitals; • Subtracting the depreciation of household durables used in unpaid household production; • Subtracting the depreciation of human capital; • Subtracting the depletion of oil and gas; • Subtracting the value of depletion and degradation of the atmosphere from greenhouse-gas emissions; • Adding net income from abroad.

## Article Content
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Unpaid work, such as volunteering at a food bank, does not typically count towards gross domestic product.
Credit: Getty
For decades, economists have known that using gross domestic product (GDP) alone
to guide policy is problematic
. The metric is mainly a measure of market production, albeit one with strong marketing and branding, and misses key elements of what makes a good life. Nevertheless,
failure to agree on alternatives
has held back the debate over what should replace it.
Beyond growth — why we need to agree on an alternative to GDP now
This year will be pivotal for changing how policymakers use data to guide decision-making. In May 2025, the United Nations secretary-general António Guterres commissioned a High-Level Expert Group to
consider alternatives to GDP
. The group’s final report is expected by the end of April and will stimulate great debate about how countries will use its proposed alternatives.
While the world awaits those recommendations, it is worth reflecting on three questions: why is GDP a poor metric, do the data exist to deliver improvements and how could better metrics provoke better policies?
Here, we offer insights from UK efforts to build on GDP to measure economic welfare using readily available national statistics and standard economic tools
1
. These inclusive metrics show, for example, how UK consumers are more dependent than previously thought on goods and services that are excluded from GDP, and they highlight the importance of social and environmental capitals for national resilience.
Challenges with GDP
GDP faces two main criticisms. First, its methodology means that it is slow to update and reflect the rapidly changing structure of modern economies. All countries need to agree updates to the methodology through a formal UN process: the System of National Accounts (SNA). This is designed to provide a comprehensive, comparable, consistent and standardized accounting system for measuring economic activity across countries and is revised on a cycle of roughly 15 years — the last revision concluded in 2025. Thus, rapidly emerging issues, such as
artificial intelligence
, can reach a state of maturity before the relevant manuals are refreshed.
The second criticism concerns the SNA’s definition of economic activity. For goods or services to be counted by the SNA as production, and feature in GDP, a person must have been involved in producing them. This can be achieved directly (by using labour to create value) or indirectly (by using capital, which itself must have been created by labour or capital). Ultimately, all production results from current or previous labour by humans.
Putting nature on the balance sheet: how to account for the ecological costs of our actions
Furthermore, by default, another human needs to verify that this production has value through a ‘meaningful economic transaction’: by purchasing the product at a market price or by a government deciding it is worth paying for through taxes. For example, timber harvested by forestry workers counts as production because people are involved in chopping and processing the wood, and its value is established when it is sold to sawmills or to other buyers.
But this narrow human focus means that GDP has two major gaps.
The first is when a human produces a service, but no economic transaction occurs. Cooking a family meal does not count as production because no payment is made, even if the food has more nutritional value than a takeaway meal, the purchase of which is included in GDP. Outputs of unpaid household activity are rising in many countries, along with numbers of part-time workers and retired people.
The second is when no human is involved in production. For example, a tree’s sequestration of carbon and release of oxygen are not recorded in GDP, even though they have or create value to people, and the same activity would carry a price if produced by a human or an operated machine. Similarly, natural water purification, pollination and climate regulation are missing from national accounts.
Why we need to measure people’s well-being — lessons from a global survey
Natural assets such as forests, for example, might be partially counted when they produce goods that enter the market, such as timber, but their broader value, such as biodiversity, carbon storage and flood prevention, is not reflected. Similarly, the fall in value of these benefits, owing to the degradation of natural assets, is excluded from GDP and national accounts.
Failing to account for most of nature and environmental degradation makes GDP a misleading indicator of long-term progress and sustainability, which
economist Partha Dasgupta
highlighted in a 2021 report
2
. Recognizing the SNA’s limitations is becoming increasingly urgent as the impact of humans on the planet grows and with changes to working patterns.
In the United Kingdom, around one-third of all goods and services consumed fall outside

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## Expert Analysis

### Merits
- The metric is mainly a measure of market production, albeit one with strong marketing and branding, and misses key elements of what makes a good life.
- This is designed to provide a comprehensive, comparable, consistent and standardized accounting system for measuring economic activity across countries and is revised on a cycle of roughly 15 years — the last revision concluded in 2025.
- Failing to account for most of nature and environmental degradation makes GDP a misleading indicator of long-term progress and sustainability, which economist Partha Dasgupta highlighted in a 2021 report 2 .
- More-inclusive metrics are needed to provide a more comprehensive picture of welfare.

### Areas for Consideration
- Nevertheless, failure to agree on alternatives has held back the debate over what should replace it.
- The second criticism concerns the SNA’s definition of economic activity.
- The first issue we described was how the majority of a nation’s capital is excluded from its national accounts 3 .

### Implications
- Credit: Getty For decades, economists have known that using gross domestic product (GDP) alone to guide policy is problematic .
- Nevertheless, failure to agree on alternatives has held back the debate over what should replace it.
- Beyond growth — why we need to agree on an alternative to GDP now This year will be pivotal for changing how policymakers use data to guide decision-making.
- In May 2025, the United Nations secretary-general António Guterres commissioned a High-Level Expert Group to consider alternatives to GDP .

### Expert Commentary
This article covers gdp, inclusive, accounts topics. Notable strengths include discussion of gdp. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 2240.