Our inspiration: the Wellbeing Economy
Bhutan was the first country to implement an economy dedicated to boosting people's wellbeing. Economies with a similar emphasis are gaining traction across the world.
We hope that you have had a restful and restorative break, and we wish you every happiness in 2025! By subscribing to this newsletter, you’ve shown that you are part of our community dedicated to building a fossil fuel-free, sustainable and regenerative South Africa. We greatly value your support.
Confession: we approach this year with some trepidation. The challenges to a liveable climate are mounting up rather than diminishing each year as carbon emissions continue to increase and the consequent disasters, most recently the horrific fires in Los Angeles, keep growing in number and scale. There will be more to come, much of it closer to home.
How can we stay motivated in the face of the overwhelming existential threat that climate chaos poses? We need a powerful and positive vision to beckon and inspire us; one so grand that it could enable us to repair much the devastation we’re facing and build happier, healthier societies.
For Fossil Free SA, one such vision is the Wellbeing Economy: an economy dedicated to serving people and the planet rather than our current approach of treating the economy as a god in abstract, where both people and natural resources are devoted to GDP growth at all costs, and the resultant harms to environment and society are swept under the carpet.
Of course, these harms come back to bite us. We note that the Stilfontein tragedy, along related events such as the Marikana massacre, is surely the consequence of what we’d call a Hardship Economy rather than a Wellbeing Economy: an extractive industry leaves its dangerous mineshafts open and unguarded; large numbers of people cannot find formal jobs; in this vacuum criminal syndicates arise, enticing people into illegal activity, and a police force without any culture of safeguarding fundamental human rights goes to the brutal extent of cutting off food and water to captive miners, resulting in the deaths of at least 80 people of thirst and starvation.
In all these ways, wellbeing − and many lives − were destroyed. Stilfontein painfully shows that the South African economy is structured to facilitate harm rather than foster wellbeing. How might this improve?
Well under way
Wellbeing Economies are already being developed in countries and regions across the world, among them Iceland, Scotland, Wales, Finland, New Zealand, and California. Other countries including Costa Rica and Ecuador have implemented aspects of a Wellbeing Economy .
The Wellbeing Economy Alliance is leading the promotion of such an economy, describing it as “an economy that delivers social justice on a healthy planet… A Wellbeing Economy satisfies five universal human needs for a good life: nature; fairness, including reduction of inequalities; participation; connection and dignity.”
To be considered a Wellbeing Economy, a country or region must establish a flexible set of wellbeing metrics and use these to monitor progress, prioritise government actions, and develop policies based on a rigorous evaluation of the impacts.
Projects that can be seen as falling within the Wellbeing Economy, or which have similarly challenged the narrow focus of mainstream elites on GDP, include the Beyond GDP Initiative, the Human Development Index, Doughnut Economics, the Happy Planet Index and the United Nations Sustainable Development Goals.
Lighting the spark
Though this may seem like a movement of developed countries, it was a less developed country, Bhutan, that was the forerunner of the movement when, in the 1970s, the tiny nation’s fourth king, Jigme Singye Wangchuck, developed the Gross National Happiness (GNH) Index to replace GDP and prioritise people’s wellbeing over economic growth. The GNH Index is based on a set of indicators that cover nine key areas, including psychological well-being, health, education, and living standards.
It measures the happiness of the Bhutanese people and guides development. The 2022 GNH Index found that 48.1% of people aged 15 years and above was classified as happy (although the prime minister says that contentment is a better description), an increase from 40.9% in 2010.
Bhutan is not perfect. It remains a poor country, where most people survive on subsistence agriculture. Nonetheless, it claims to be making progress.
"I am 58 years old. In my generation Bhutan has transformed from a medieval society, literally with no roads, no clean drinking water, life expectancy in the 40s," said Prime Minister Tshering Tobgay in a recent video on CBS News. “Today, there is free health care and education, and life expectancy is over 70… Our economy, although small, has been growing in the last 30 years by about 6%. And it’s growing without destroying, undermining, our culture.
“So by these measurements, I would say that Gross National Happiness has succeeded.”
“A growing movement”
Iceland, possibly the most advanced of the countries now implementing a Wellbeing Economy, received a World Health Organisation award in July 2024 for its efforts in promoting such economies at home and around the world.
Said Iceland’s Prime Minister Bjarni Benediktsson, in his opening address at the Wellbeing Economy Forum where the award was granted: “In recent decades, we have witnessed a growing movement within academia and politics advocating for policies that encourage more inclusive, equitable and sustainable societies…
“Let me give an example: If someone does not feel safe at home, has insufficient access to health care, is without a job and has nowhere to live, is knowing that gross domestic product per capita is high going to help? Not really.”
Despite being a relatively prosperous country, Iceland saw rising levels of mental illness and obesity in the years prior to its focus on wellbeing.
A government decision to make gender a primary economy goal led Iceland to lead the world on gender equality; following this experience, the government decided to explore more holistic ways of selecting policies to improve quality of life.
Measuring wellbeing
Iceland introduced a framework of 39 wellbeing indicators in 2019 after two years of consultation with the public, political opposition, public service and non-government organisations. Six priorities were identified and will guide the country’s Five Year Fiscal Strategic Plan: mental health, secure housing, better work-life balance, zero carbon emissions, innovation growth and better communication with the public.
Iceland has committed to conducting regular surveys on the nation’s wellbeing due to COVID-19. The first is underway.
Commentators have observed that a limitation of the Wellbeing Economy is that its ideas are generally added on to an existing economic system, rather than overhauling it, which limits the benefits. However, it might be worth noting that Iceland came third in the 2024 World Happiness Report, following Finland (first) and Denmark, in a gradual climb from sixth place in 2010.
Valuing real world benefits, not statistical proxies
Scotland aims to have developed a Wellbeing Economy by 2032 by implementing its National Strategy for Economic Transformation, published in March 2022. Its Wellbeing Economy Monitor will assess progress. In a TedTalk, former Scottish first minister Nicola Sturgeon explained why countries should develop a Wellbeing Economy:
“GDP measures the output of all our of our work, but it says nothing about the nature of that work; about whether that work is worthwhile or fulfilling. It puts a value, for example, on illegal drug consumption but not on unpaid care; it values activities that create value in the short-term, even if those activities cause massive damage to the sustainability of our planet in the longer term.”
We note that to date, most of the countries implementing a Wellbeing Economy are highly developed or highly democratic. How might the approach differ in South Africa, a middle-income country that nevertheless has extreme unemployment and dramatic inequality?
We don’t claim to have all the answers but look forward to exploring them. A few things are clear – our extreme inequality that we seem to consider to be the natural order is in fact the inevitable outcome of an economy that repeatedly prioritises investment in stuff – not least fossil fuel extraction – rather than in people, and where economic decision-making, despite our supposedly vibrant democracy, is in reality concentrated in the hands of a tiny and largely unaccountable elite in business and government.
The basic principles of wellbeing, we’re convinced, are as necessary and valuable – if not even more so – here as anywhere else.
Ecuador’s Buen Vivir
Many other countries have approaches similar to that of the Wellbeing Economy in going beyond GDP, including Ecuador – like South Africa, a middle-income country with great poverty – with its Buen Vivir policies. Buen Vivir is originally an Indigenous Ecuadorian Amazon concept viewing nature and social environments as intertwined, and a healthy natural world as indispensable for human wellbeing.
The National Plan for Buen Vivir was found to decrease poverty levels from 46% to 30% and indigence (extreme poverty) from 19% to 9% between 2007 and 2014, although inequities continued based on ethnicity, occupational class and region. Unfortunately, the country’s oil-reliant economy nosedived when commodity prices plummeted in subsequent years. Austerity measures were introduced and the funding of Buen Vivir programmes was slashed.
Costa Rica is known for its robust provision of basic services, reforestation, biodiversity and conservation work − and regularly tops or out-performs in indices such the Happy Planet Index and the Social Progress Index.
Economist Lorenzo Fioramonti, long based at the University of Pretoria and author of Wellbeing Economy (2017), has pointed out that the idea has caught on to the extent that even the World Bank (at times and in some contexts) now espouses its principles of social protection and human development.
Examples of some other countries moving towards a Wellbeing Economy are below:
Addressing the disaffection from politics
“We need to move to an economy where we don't grow through destruction, but where we grow through regeneration,” observed Inger Andersen, Executive Director of the UN Environment Programme.
Said then-Scottish Prime Minister Nicola Sturgeon in her TedTalk: “When we engage people in what kind of society we want to be, what kind of country we want to be, then I believe we have a chance of addressing the alienation and disaffection from politics that is so prevalent… today.”
We will continue to explore the Wellbeing Economy in subsequent newsletters, looking at how it might be implemented in South Africa, how it might improve wellbeing here, and deeper dives into its implementation elsewhere.
Interested? Please leave a comment below. And if you know someone else who might enjoy this post, feel free to share it.
ENDS
I agree that attempting to maximise happiness is far better than trying to maximise GDP.
However, GDP and Happiness Indexes measure different things and are therefore not really comparable.
Moreover:
• GDP is an objective measure of the total monetary value of output of the formal economy. However, it is an incomplete measure. As stated, GDP excludes unpaid work. It also excludes the informal economy. Thus, the example of drug deals is not believable – for obvious reasons, dealers in illegal drugs do not report their earnings to any financial authority.
• Since GDP excludes the informal economy, in countries like South Africa, with a large informal sector GDP numbers can be very misleading.
• Happiness indexes are subjective measures of people’s perceptions. They are produced from surveys of a sample of the population. That makes them prone to error and they can easily be manipulated to give whatever result is desired by whoever is doing the survey.
Mark