Israel Bins GDP as Sole Parameter in Measuring Quality of Life

In move, Israel follows lead of other OECD member countries who in recent years have adopted a list of measures that complement GDP.

The government will formulate a new series of indicators to gauge the quality of life in Israel and the country’s economic situation, instead of relying solely on gross domestic product ‏(GDP‏) figures.

Last week, the committee of ministry director generals, headed by Prime Minister’s Office Director General Harel Locker, opted to adopt a long list of recommendations to determine these indexes. The recommendations were presented as part of a report prepared by the Environmental Protection Ministry, in cooperation with other ministries.

The committee − which also includes Prof. Eugene Kandel, the head of the National Economic Council at the PMO − decided to set nine areas in which detailed indexes will be formulated to measure the quality of life, welfare and socioeconomic state of Israel.

Among the things to be measured are civil and government involvement, employment and the balance between work and leisure, infrastructure and housing, education, personal security, health, personal and societal welfare, and the environmental situation.

The report recommended a long list of possible measures. In the area of housing and infrastructure, for example, the report proposed indexes of the number of homeless; the number of people per room in housing; and the number of households without an appropriate housing solution.

As for the environment, there were measures such as the quantity and quality of environmental resources and biological diversity; energy usage and efficiency; noise from transportation; and the affect of pollution on human welfare.

In the area of employment, the committee recommended setting an index of the number of leisure hours, which examines the amount of leisure time available to workers. In addition, surveys will be used to measure the satisfaction of Israelis with their quality of life.

Representatives from the Central Bureau of Statistics and the Environmental Protection Ministry said that macroeconomic measures, such as GDP, are essential for measuring certain aspects of economic success, but do not express success and improvement in many other areas of social and economic activity.

“One of the fundamental problems in using GDP as the basis for measuring human progress is the fact that it includes many factors that have a negative influence on society and the environment,” the report stated. “For example, investment in prisons, policing and security, or investment in industrial production that pollutes, contribute to the growth in GDP. There is also importance to measuring investments whose goals are to advance and preserve the quality of life and in measuring activities to strengthen social cohesion,” the report added.

GDP also does not relate to questions of the distribution of wealth and income between individuals, and does not include many activities of households and their contribution to general welfare, said the report.

“It is impossible to base long-term decisions only on the basis of one number, GDP,” said Environmental Protection Minister Amir Peretz after the meeting in the Prime Minister’s Office. “In order to improve the quality of life, there is a need to examine it with a range of tools, and to present them when we come to determine the state budget,” he added.

“In the end, the goal is to translate these measures of quality of life into government policy in various matters,” said Locker. The general public will also be involved in formulating the new measures, he said.

The interministerial committee’s decision reflects a cabinet decree from 2012. At the time, the cabinet decided that, in order to improve the government’s ability in formulating and managing economic and social strategy, there was a need to determine measures of the quality of life, sustainability and national resilience.

Israel is following many other countries who are members of the Organization for Economic Cooperation and Development, who, in recent years, have adopted a list of measures that complement GDP.

Israel is already involved in the process of adopting new social indexes, as it was the country chosen by the OECD to undertake pioneering research into evaluating the quality of life, based on 11 different indexes determined by the OECD.

Experts from the organization will soon arrive in Israel to carry out an evaluation on the state of the quality of life here based on these measures, in cooperation with the Environmental Protection Ministry. Among other things, they will examine the inequality in Israeli society and the state of natural resources.