Gross Domestic Product, or GDP, has been the primary metric for assessing a nation’s economic performance and is often placed above all other indexes in terms of importance in much of America’s political discourse.
Though GDP offers valuable insights into the state of a country’s economic activity, it falls short of capturing the full picture of national success and citizens’ well-being. A number of other metrics should be adopted alongside GDP to reflect the country holistically.
GDP measures the total monetary value of all goods and services produced within a country over the span of a year. However, this measure doesn’t account for many other critical aspects in determining overall quality of life, including societal health, environmental sustainability, gender equality and individual quality of life.
A high GDP isn’t necessarily indicative of the general population’s well-being, which is the metric that should matter most in determining the health and success of a society. The strength of GDP is that the index will usually translate to success in other metrics that strengthen the country as a whole, but this correlation is not always the case.
GDP isn’t perfectly reliable. Even Simon Kuznets, an influential economist who played a large role in developing the formula behind GDP, cautioned against equating the index with societal well-being. GDP could increase even in situations where income inequality is rising, wealth gaps are growing and environmental conditions are deteriorating. Therefore, we shouldn’t use GDP as a sole indicator of a nation’s success.
For instance, Saudi Arabia, Qatar and China — all of which have high GDP indexes — have another aspect in common: their low Human Development Index (HDI), a metric for the well-being and knowledge of people in a country. For many developed countries like these, the economy of natural resources, including oil, gas and coal, has raised GDP while simultaneously harming other valuable areas like the environment and public health. This paradox is termed the resource curse. Countries suffering from it often grapple with issues like persistent rural poverty, environmental and climate issues, gender inequalities and limited civil liberties, despite their high GDP indexes.
Regardless, many policymakers and commentators continue to prioritize GDP growth above all other indexes, including the HDI, Gender Inequality Index (GII), Gini Index or Gini Coefficient, Environmental Performance Index (EPI) and more. However, it is essential to begin considering the other index rates used in different countries, which offer more reliable indicators of social well-being. In fact, it is often more dependable to use numbers from these systems in tandem.
To start, the HDI combines data on life expectancy, education and per capita income to assess a country’s social and economic development, considering factors that directly affect people’s lives. Though it may often oversimplify human well-being and fail to account for inequality, poverty, security and gender or ethnic disparities, this is where the next set of metrics comes in.
The GII reflects gender-based disadvantages regarding reproductive needs, empowerment of women and the labor market. The GII captures the potential loss in human development based on the inequality between female and male achievements, ranging from zero — where women and men fare equally — to one, where one gender fares as poorly as possible.
Similarly, the Gini Index measures income inequality within a nation and wealth gaps in income. A score of zero equates to perfect equality, while a score of one indicates maximum inequality. With high income inequality comes a range of problems including social unrest and hindered economic growth, which not only brings down GDP but also lowers global living standards.
Lastly, the EPI evaluates countries’ environmental health and ecosystem vitality across many categories. It assesses how well countries are performing in areas regarding air and water quality, biodiversity and climate change. This index emphasizes that wealth alone does not guarantee strong environmental performance. It’s critical to look into the policy choices and investments that countries are making regarding sustainability, especially because they shape long-term environmental outcomes.
There is no world where people should prioritize the economy over environmental protections or vice versa. The fact that they are often framed as competitors is a grave misconception — they are both essential in unique ways and must be balanced. Without a stable economy or reliable GDP index, individuals will suffer from widespread unemployment, underfunded public services and more social instability, leading to a lower quality of life, deepened poverty and constant worry about how they and their families will survive.
The same goes for environmental protections. Without a strong EPI, citizens will begin noticing polluted air and water, along with an increase in their health and breathing issues. More climate disasters will occur and damage not only people’s bodies but also the environment that sustains them. There would be no economy to continue running if people weren’t alive to do so.
Despite all these comprehensive metrics, GDP remains the dominant focus in political discourse. Many policymakers and commentators prioritize GDP growth as the primary indicator of national success, often neglecting the importance of well-being, the environment, gender equality and so much more. By integrating measures like HDI, GII, Gini Index and EPI into policymaking and public discourse, governments can promote not only economic growth but also social equity, environmental sustainability and individual happiness.
Though there is no single index that should replace GDP, there are many others that exist to supplement it — with the living standards of the people and the state of the environment in mind.
Julia Kremenetsky is an Opinion Intern for the spring 2025 quarter. She can be reached at jkremene@uci.edu.
Edited by Casey Mendoza and Gabrielle Neve Landavora