Many developed countries that achieved developed status following the industrial revolution set narrow societal goals. Since the late 19th century, these have included production, increased productivity, and economic growth. Through such values, gross domestic product (GDP) has become a widely-used measure and de-facto yardstick of the wealth of nations. The advantage of the GDP approach is that it involves only a single measure, but it has its limits of which two stand out. First, GDP includes only things that can be converted to money. Productive activities that cannot be valued in monetary terms are not included (although efforts have been made recently through the calculation of genuine savings or net adjusted savings). Secondly, whether we include activities such as cooking and looking after children raises questions as to how we want to measure social welfare, or better said well-being. As such, GDP cannot be taken as a reliable gauge of individual and collective well-being in various societal contexts and different environmental settings. It doesn’t adjust for the ongoing depletion of our material resources and natural capital and prioritizes a growth-oriented vision of economic well-being.
In 1990, the Human Development Index (HDI) was strategically developed as an indicator that could compete with and replace GDP. It aimed to express the concept of human development, based on Amartya Sen’s capability approach. Sen defined this as an alternative combination of functionings—the various things a person may value doing or being that are feasible for them to achieve.
Taking this as a conceptual basis, over the years, the United Nations Development Programme (UNDP) has focused on health, education, and income as basic functions that should be included in approaches toward human development and adopted average life expectancy, literacy rate, and enrollment rate as educational indicators and per capita GDP as a component.
However, when we look at the world based on HDI country rankings it does not depart radically from that based on GDP rankings, even if HDI includes factors other than production levels. To date, HDI has focused primarily on human society and, in that sense, it is limited by a strong bias toward humans and does not directly consider environmental constraints. There is a need to rethink the capability approach and reassess how we can measure present global potentiality within the framework of sustainability, go beyond the primary focus of the needs of human society, and consider the needs of life in the broadest sense. This index provides a starting point to do so.