On January 4, 1934, a young man delivered a report to the United States Congress that 80 years on, still shapes the lives of everyone in this room today, still shapes the lives of everyone on this planet. That young man wasn't a politician, he wasn't a businessman, a civil rights activist or a faith leader. He was that most unlikely of heroes, an economist. His name was Simon Kuznets and the report that he delivered was called "National Income, 1929-1932."
Now, you might think this is a rather dry and dull report. And you're absolutely right. It's dry as a bone. But this report is the foundation of how, today, we judge the success of countries: what we know best as Gross Domestic Product, GDP.
GDP has defined and shaped our lives for the last 80 years. And today I want to talk about a different way to measure the success of countries, a different way to define and shape our lives for the next 80 years.
But first, we have to understand how GDP came to dominate our lives. Kuznets' report was delivered at a moment of crisis. The U.S. economy was plummeting into the Great Depression and policy makers were struggling to respond. Struggling because they didn't know what was going on. They didn't have data and statistics. So what Kuznet's report gave them was reliable data on what the U.S. economy was producing, updated year by year. And armed with this information, policy makers were, eventually, able to find a way out of the slump. And because Kuznets' invention was found to be so useful, it spread around the world. And now today, every country produces GDP statistics.
But, in that first report, Kuznets himself delivered a warning. It's in the introductory chapter. On page seven he says, "The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above." It's not the greatest sound bite in the world, and it's dressed up in the cautious language of the economist. But his message was clear: GDP is a tool to help us measure economic performance. It's not a measure of our well-being. And it shouldn't be a guide to all decision making.
But we have ignored Kuznets' warning. We live in a world where GDP is the benchmark of success in a global economy. Our politicians boast when GDP goes up. Markets move and trillions of dollars of capital move around the world based on which countries are going up and which countries are going down, all measured in GDP. Our societies have become engines to create more GDP.
But we know that GDP is flawed. It ignores the environment. It counts bombs and prisons as progress. It can't count happiness or community. And it has nothing to say about fairness or justice. Is it any surprise that our world, marching to the drumbeat of GDP, is teetering on the brink of environmental disaster and filled with anger and conflict?
We need a better way to measure our societies, a measure based on the real things that matter to real people. Do I have enough to eat? Can I read and write? Am I safe? Do I have rights? Do I live in a society where I'm not discriminated against? Is my future and the future of my children prevented from environmental destruction? These are questions that GDP does not and cannot answer.
There have, of course, been efforts in the past to move beyond GDP. But I believe that we're living in a moment when we are ready for a measurement revolution. We're ready because we've seen, in the financial crisis of 2008, how our fetish for economic growth led us so far astray. We've seen, in the Arab Spring, how countries like Tunisia were supposedly economic superstars, but they were societies that were seething with discontentment. We're ready, because today we have the technology to gather and analyze data in ways that would have been unimaginable to Kuznets.
Today, I'd like to introduce you to the Social Progress Index. It's a measure of the well-being of society, completely separate from GDP. It's a whole new way of looking at the world. The Social Progress Index begins by defining what it means to be a good society based around three dimensions. The first is, does everyone have the basic needs for survival: food, water, shelter, safety? Secondly, does everyone have access to the building blocks to improve their lives: education, information, health and sustainable environment? And then third, does every individual have access to a chance to pursue their goals and dreams and ambitions free from obstacles? Do they have rights, freedom of choice, freedom from discrimination and access to the the world's most advanced knowledge? Together, these 12 components form the Social Progress framework. And for each of these 12 components, we have indicators to measure how countries are performing. Not indicators of effort or intention, but real achievement. We don't measure how much a country spends on healthcare, we measure the length and quality of people's lives. We don't measure whether governments pass laws against discrimination, we measure whether people experience discrimination.
But what you want to know is who's top, don't you? (Laughter) I knew that, I knew that, I knew that. Okay, I'm going to show you. I'm going to show you on this chart. So here we are, what I've done here is put on the vertical axis social progress. Higher is better. And then, just for comparison, just for fun, on the horizontal axis is GDP per capita. Further to the right is more. So the country in the world with the highest social progress, the number one country on social progress is New Zealand. (Applause) Well done! Never been; must go. (Laughter) The country with the least social progress, I'm sorry to say, is Chad. I've never been; maybe next year. (Laughter) Or maybe the year after.
Now, I know what you're thinking. You're thinking, "Aha, but New Zealand has a higher GDP than Chad!" It's a good point, well made. But let me show you two other countries. Here's the United States — considerably richer than New Zealand, but with a lower level of social progress. And then here's Senegal — it's got a higher level of social progress than Chad, but the same level of GDP. So what's going on? Well, look. Let me bring in the rest of the countries of the world, the 132 we've been able to measure, each one represented by a dot. There we go. Lots of dots. Now, obviously I can't do all of them, so a few highlights for you: The highest ranked G7 country is Canada. My country, the United Kingdom, is sort of middling, sort of dull, but who cares — at least we beat the French. (Laughter) And then looking at the emerging economies, top of the BRICS, pleased to say, is Brazil. (Applause) Come on, cheer! Go, Brazil! Beating South Africa, then Russia, then China and then India. Tucked away on the right-hand side, you will see a dot of a country with a lot of GDP but not a huge amount of social progress — that's Kuwait. Just above Brazil is a social progress superpower — that's Costa Rica. It's got a level of social progress the same as some Western European countries, with a much lower GDP.
Now, my slide is getting a little cluttered and I'd like to step back a bit. So let me take away these countries, and then pop in the regression line. So this shows the average relationship between GDP and social progress. The first thing to notice, is that there's lots of noise around the trend line. And what this shows, what this empirically demonstrates, is that GDP is not destiny. At every level of GDP per capita, there are opportunities for more social progress, risks of less. The second thing to notice is that for poor countries, the curve is really steep. So what this tells us is that if poor countries can get a little bit of extra GDP, and if they reinvest that in doctors, nurses, water supplies, sanitation, etc., there's a lot of social progress bang for your GDP buck. And that's good news, and that's what we've seen over the last 20, 30 years, with a lot of people lifted out of poverty by economic growth and good policies in poorer countries.
But go on a bit further up the curve, and then we see it flattening out. Each extra dollar of GDP is buying less and less social progress. And with more and more of the world's population living on this part of the curve, it means GDP is becoming less and less useful as a guide to our development. I'll show you an example of Brazil.
Here's Brazil: social progress of about 70 out of 100, GDP per capita about 14,000 dollars a year. And look, Brazil's above the line. Brazil is doing a reasonably good job of turning GDP into social progress. But where does Brazil go next? Let's say that Brazil adopts a bold economic plan to double GDP in the next decade. But that is only half a plan. It's less than half a plan, because where does Brazil want to go on social progress? Brazil, it's possible to increase your growth, increase your GDP, while stagnating or going backwards on social progress. We don't want Brazil to become like Russia. What you really want is for Brazil to get ever more efficient at creating social progress from its GDP, so it becomes more like New Zealand. And what that means is that Brazil needs to prioritize social progress in its development plan and see that it's not just growth alone, it's growth with social progress. And that's what the Social Progress Index does: It reframes the debate about development, not just about GDP alone, but inclusive, sustainable growth that brings real improvements in people's lives. And it's not just about countries.
Earlier this year, with our friends from the Imazon nonprofit here in Brazil, we launched the first subnational Social Progress Index. We did it for the Amazon region. It's an area the size of Europe, 24 million people, one of the most deprived parts of the country. And here are the results, and this is broken down into nearly 800 different municipalities. And with this detailed information about the real quality of life in this part of the country, Imazon and other partners from government, business and civil society can work together to construct a development plan that will help really improve people's lives, while protecting that precious global asset that is the Amazon Rainforest. And this is just the beginning, You can create a Social Progress Index for any state, region, city or municipality. We all know and love TEDx; this is Social Pogress-x. This is a tool for anyone to come and use.
Contrary to the way we sometimes talk about it, GDP was not handed down from God on tablets of stone. (Laughter) It's a measurement tool invented in the 20th century to address the challenges of the 20th century. In the 21st century, we face new challenges: aging, obesity, climate change, and so on. To face those challenges, we need new tools of measurement, new ways of valuing progress.
Imagine if we could measure what nonprofits, charities, volunteers, civil society organizations really contribute to our society. Imagine if businesses competed not just on the basis of their economic contribution, but on their contribution to social progress. Imagine if we could hold politicians to account for really improving people's lives. Imagine if we could work together — government, business, civil society, me, you — and make this century the century of social progress. Thank you. (Applause)
