A new index fills in the portrait of human well-being

Posted: May 02, 2010

Estimates of the first-quarter gross domestic product were recently reported and discussed as a measure of our progress out of the worst economic downturn in generations. But a country cannot be measured by GDP alone.

The late economist Mahbub ul Haq often noted that Vietnam and Pakistan had the same GDP per capita, around $2,000 per year, but Vietnamese, on average, lived eight years longer than Pakistanis and were twice as likely to be able to read. In other words, the same income was buying two dramatically different levels of human well-being. This difference led Haq to insist that nations needed a more comprehensive measure to judge the welfare of their people, a gauge of human development.

In 1990, working through the United Nations, Haq, Nobel laureate Amartya Sen, and others began to issue an annual human development report ranking every country in the world on its citizens' health, education, and standard of living.

More recently, the New York-based Social Science Research Council introduced an American Human Development Index, which measures health, education, and income. Its latest report, "A Century Apart," shows that Asian Americans in New Jersey are the racial/ethnic group with the highest American Human Development Index score. They experience levels of well-being that, if trends continue, the country as a whole will reach in about 50 years. At the other end of the spectrum, Native Americans in South Dakota lag more than a half-century behind the rest of the nation.

New Jersey Asian Americans live, on average, an astonishing 26 years longer, are 11 times more likely to have a graduate degree, and earn $35,610 more per year than South Dakota Native Americans. This gap in wages exceeds the median annual earnings of the typical American worker (about $30,000). Looking at one racial group across states, African Americans in Maryland live 3 1/2 years longer, are more than twice as likely to have a graduate degree, and earn almost $16,000 more than African Americans in Louisiana.

With the near-exclusive use of GDP growth as the central measure of societal success, we risk failing to understand these great disparities across the economy and falling short of our goals to improve the nation's standard of living. By several important gauges, such as health and education, America has slipped behind many other countries in recent years. But our still-high GDP enables policymakers and citizens to ignore the slippage. And what we don't measure, we don't address.

At least as important as what GDP counts is what it omits: unpaid labor in the form of child and elder care, wide gaps in earnings between whites and Americans of other races as well as between women and men, and more. A near-exclusive focus on the data used to measure market activity means that other data receive lower priority. We release inflation figures, trade deficits, and personal income monthly, with a one-month delay. Infant death figures, however, show up only after a three-year delay. By the time we spot a trend, it's too late. If we want citizens to lead long, healthy lives we must give more weight to the noneconomic measures that tell us how people are faring.

GDP is an important part of a nation's story, but the American HD Index is an essential supplement. Complementing GDP with data on health, education, and other basic building blocks of a life of opportunity and value, and capturing the gaps between groups, would better equip us as a nation to ensure that all boats are rising together on the wave of our expanding GDP. Just ask Asian Americans in New Jersey - or Native Americans in South Dakota.

Sarah Burd-Sharps and Kristen Lewis are authors of "The Measure of America: American Human Development Report 2008-2009."

E-mail the authors at sarah@measureofamerica.org and kristen@measureofamerica.org.

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