For a small but growing network of countries, GDP is no longer the right measure of the health of their economies, notes CNBC.

Majority led by women, Finland, Iceland, Scotland, Wales and New Zealand are members of the Wellbeing Economy Governments partnership. The coalition, expected to expand in the coming months, aims to transform economies around the world to create shared prosperity for people and the planet by 2040.

This means abandoning the idea that percentage change in GDP is a good indicator of progress and rethinking economic policy to support the quality of life for all people in harmony with the environment.

A welfare-based economic approach

“The need for a new economic model has never been clearer,” Scottish Prime Minister Nicola Sturgeon told CNBC.

Encouraging other strategists to consider a welfare-based economic approach, Sturgeon says the multiple global crises “raise fundamental questions about what we value and what our economies are really about”.

“We want to look beyond GDP to understand progress, but we don’t have a single measure of well-being, so we need to look at a whole range of indicators and evidence to understand progress more broadly,” says economic adviser Diminick Stephens head of the New Zealand Treasury.

Counterarguments to the use of the GDP indicator

Professors and economists told CNBC that the ultimatum issued by scientists regarding global warming highlights the need to abandon the obsession with growth at any cost.

GDP critics argue that the indicator is misleading because it measures “what is good, what is bad and what is ugly” in economic activity and catalogs everything good.

GDP, for example, does not take unpaid work into account, nor does it distinguish between economic activity with a positive or negative contribution to the health and well-being of people and the natural environment.

Moving beyond GDP, also supported by the UN Secretary General

UN Secretary-General Antonio Guterres also joined the growing number of voices calling for the abandonment of GDP as the preferred indicator of economic growth, urging strategists to focus on a circular economy.

“We must value the environment and move beyond GDP as a measure of human progress and well-being,” Guterres said.

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