By one measurement, Costa Rica is now the richest country on earth. That may sound surprising, but less-orthodox indices are looking beyond GDP to see which countries are the wealthiest.
GDP (gross domestic product) records financial transactions within a country and is the most common measurement used for ranking countries’ relative wealth. But it doesn’t tell much about how people feel about their lives or surroundings, according to Fast Company.
To measure success, we need to account for more than financial transactions, says Laura Stoll of the New Economics Foundation, a U.K. based think-tank.
GDP is a good measure of transactions. But increasingly GDP and life satisfaction are growing apart in many places. Rising GDP doesn’t, in a lot of cases, translate to rises in well-being.
Enter the Happy Planet Index, developed by the New Economics Foundation to include satisfaction, life expectancy and ecological footprint into comparative wealth measurements.
The happier people say they are and the longer they live, the higher a country's score. The more land required to support each person in that country, the lower the score.
With all of these factors in the equation, the list of who’s rich according to the 2012 Happy Planet Index (HPI) looks different than might be expected. Ecologically-friendly Costa Rica tops the current list, now in its third edition, and is closely followed by Vietnam and Colombia, according to Fast Company.
The measurement system “tells you how efficient countries are at converting limited environmental resources into long and happy lives for their citizens," Stoll says. This interactive map from the New Economics Foundation shows where the HPI's new economic champions are: Latin America and Southeast Asia.
But the Happy Planet Index isn’t the only way that more than money is being used to measure wealth. Ten African countries recently agreed to put a price on natural capital, and in the lead-up to this month’s Rio+20 conference the UN even got in on the fun of new measurements.
The UN’s Inclusive Wealth Index provides “a comprehensive look at a country's wealth that takes things like forests and rivers into account,” according to The Economist. Acknowledging that “GDP does not consider natural-resource depletion or environmental degradation,” the Inclusive Wealth Index is based on measurements of 20 countries’ human, natural and produced capital, shown in the chart below.
Wealth is more than just money and exchanges. It’s also people’s ability to thrive in their environments and their promise for a happy and productive future. That means not only access to economic opportunity and markets, but day-to-day satisfaction and a well-protected natural environment.
These new measurements might not tell the whole story of comparative wealth, but it’s clear that GDP doesn’t either.
Watch and listen as Nic Marks of the New Economic Foundation describes the origins and measurements of the Happy Planet Index.