Commentary: In our never-ending pursuit of GDP, weve overlooked one key benchmark

LONDON: Dissatisfaction about gross domestic product is growing. Many economists, policymakers, and other critics question the ability of this central measure of government and social success to recognise the welfare gains from technology, account for environmental degradation, or capture rising inequality.

With developments in artificial intelligence and robotics poised to produce considerable labour-market churn while also boosting GDP – a process likely to be accelerated by the ongoing pandemic – these complaints will soon grow louder.

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Numerous alternative indicators have long been on offer, but one especially promising option is healthy life expectancy (HLE), a metric that is easily understood and that has obvious importance to each of us individually.

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LONGER, HEALTHIER LIVES

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HLE is already being measured, and happens to address many of the factors that GDP might omit.

Poor environmental conditions, for example, are not conducive to long, healthy lives. And there is plenty of evidence to suggest that individuals who are happy and fulfilled also tend to live longer and remain healthy for longer.

Even more to the point, longer healthier lives connect back to GDP itself. Just as rising GDP helps to provide the resources needed to support health, healthy populations support stronger GDP.

Moreover, by targeting HLE specifically, governments could shine a brighter light on the issue of economic inequality. Because the incomes of the very richest households may be several thousand times greater than those of the poorest households, average GDP is invariably larger than typical (median) income.

Office workers at Raffles Place after the circuit breaker period. (Photo: Gaya Chandramohan)

But when it comes to life expectancy in the richest countries, the opposite is true. The outliers tend to be those who die young, so that typical (median) life expectancy is higher than average life expectancy.

This means that raising the average HLE can be achieved by raising the HLE of those at the bottom of the health distribution to that of the typical (median) person.

This not only makes targeting inequality more attractive, but does not require path-breaking medical innovations to achieve longer lifespans – just the achievement of typical outcomes for more people.

With this in mind, it is urgent to close the sizeable rich-poor life-expectancy gap – around 15 years – in the United States.

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LOOK OUT FOR AGEING

As a metric for economic and social progress, targeting HLE implicitly acknowledges that ageing is malleable (if it wasnt, it wouldnt be a viable target). It turns out that a range of behaviours and policies, as well as the environment we inhabit, influence how we age and how long we live.

It is estimated that our genetics account for only one-quarter of the factors contributing to how we age. Given this malleability, it is crucial that governments focus on HLE for the maximum number of people.

Such a focus would also help governments confront one of the biggest challenges of the future: Societal ageing. Given that every country in the world is expected to experience societal ageing, focusing on how well we age becomes paramount.

This age malleability requires drawing a distinction between chronological and biological measures of age and focusing on the latter.

FILE PHOTO: Elderly people play cards in Rome, Italy October 8, 2018. Picture taken October 8, 2018. REUTERS/Tony Gentile

Yet, because so much government policy currently focuses on the non-malleable chronological metric, too many governments are unprepared for future demographic challenges such as overburdened health and pension systems.

Rather than exploring ways to influence how we age, policymakers are focused almost entirely on the number of “old” people. But by targeting healthy longevity, they could help more people lead longer, more productive lives, thereby minimising the economic costs of societal ageing.

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BOOSTING HLE

After the 2008 financial crisis, policymakers committed to doing “whatever it takes” to stabilise the financial system and restore GDP growth.

A subsequent slowdown in trend productivity growth and the devastating global economic fallout from the current pandemic have produced numerous policy suggestions and unprecedented spending aimed at reversing trend slowdowns in GDP growth.

By contrast, news of declining life expectancy in many OECD countries has not produced a similar outpouring of proposed solutions. How can we commit trillions of dollars to ensure that GDP is supported while doing so little to avoid declining life expectancy?

Certainly, the response to COVID-19, where GDP has plummeted as a result of life-saving measures, suggests that substantial policy measures to boost HLE are worthwhile.

FILE PHOTO: An elderly woman wearing a protective face mask walks at a Buddhist temple at Asakusa district, a popular sightseeing spot, amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan July 22, 2020. REUTERS/Issei Kato

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