economics politics

New Zealand’s wellbeing budget

“We need to address the societal well-being of our nation, not just the economic well-being,” Jacinda Ardern told the World Economic Forum earlier this year. New Zealand’s prime minister said that to meet people’s real needs, politics would need to operate through a lens of “kindness, empathy and well-being”.

The world has known for generations that GDP doesn’t capture what makes life most worthwhile, and that it’s a poor proxy for human flourishing. It’s originator, Simon Kuznets, warned about it right from the start. Robert F Kennedy gave a famous speech about its limitations in 1968. David Cameron wrote and then forgot that “the pursuit of wealth is no longer – if it ever was – enough to meet people’s hope and aspirations”.

So we know that we need to do better than GDP, and all sorts of alternatives have been developed. Britain has its wellbeing dashboard. What we don’t see very often is those measures brought into decision making. They tend to be optional nice things to have on the side while the serious politicians deal with growth. So it is refreshing to see New Zealand announce a world first ‘wellbeing budget’, and its intention to measure its success by the wellbeing of its citizens.

“Sure, we had – and have – GDP growth rates that many other countries around the world envied” said finance minister Grant Robertson, “but for many New Zealanders, this GDP growth had not translated into higher living standards or better opportunities.”

We’ll find out later this week what that means in practice, but the Wellbeing Budget is expected to focus on mental health, poverty and inequality.

Time will tell whether the substance matches the rhetoric, but there’s no doubt that Jacinda Ardern represents a different kind of politician, and that she has put wellbeing on the agenda nationally and internationally. More governments are debating how to best incorporate wellbeing into their planning, and the Wellbeing Economy Alliance is doing some great advocacy work on the subject.

In my experience, one of the first words used to argue against wellbeing is that it is ‘wooly’. Happiness research can be a bit vague and subjective, sure, but wellbeing has a much broader scope than happiness and that’s a lazy characterisation. The politics of wellbeing deals with the real issues that affect people’s everyday lives. In that sense it’s actually far more concrete than GDP-based decision making, which deals in proxies and abstractions.

In time, we might come to see it the other way round: wellbeing will be the ground of serious politics, and GDP will be the optional extra for those who are interested. And in my book, that would be a handy sign of Arrival.

5 comments

  1. You may want to make a correction – it was Robert F Kennedy who made that speech in 1968. John F Kennedy died in 1963. Not all dates are red flags for me, but I remember Nov. 22, 1963 vividly as do most living in the US do/did.

  2. I think more than a few NZers are troubled over the lack of calibration or relativity of each well-being gradient – each of which is translated to a dollar figure but with no mechanism for objectively balancing. Illogical to create a dollar figure from, say, apples and then weight that against a dollar figure generated from, say, snails. There is so much subjective input that the exercise can in no way be held to be objective.

    1. Yes, and there are ways to do this well and ways that it could be done very badly. I sincerely hope they get it right, since so many people are watching. If the experiment fails wellbeing measurements could take a serious hit.

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