The call for welfare metrics which go beyond gross domestic product (GDP) has never been stronger. September 2024 has seen the ratification of the UN Pact for the Future, which through Action 53 commits to “develop a framework on measures of progress on sustainable development to complement and go beyond gross domestic product” (United Nations, 2024d, p27). The EU also has its own beyond-GDP initiative, and the president of the European Commission herself, Ursula Von Der Leyen, delivered the following words while speaking at 2023’s Beyond Growth Conference:
“It was Robert Kennedy back in the 1960s who famously said that GDP ‘measures everything, except that which makes life worthwhile: the health of our children, or the joy of their play'. And I am sure had he given his speech today, Kennedy would have included the sound of birdsong and the joy of breathing clean air. Today, on a very fundamental level, we understand Kennedy's wisdom. That economic growth is not an end in itself.” (European Commission, 2023)
But questions over the centrality of GDP in driving prosperity are not new, even within the institutional mainstream. 2008 saw the creation of the ‘Commission on the Measurement of Economic Performance and Social Progress’, bringing together some of the world’s leading economists in Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi to explore beyond-GDP approaches to measuring human progress (Stiglitz, Sen and Fitoussi, 2008). Even the Sustainable Development Goals themselves should be considered a significant milestone in recognising the full richness of what matters for the planet and its people.
The pursuit of alternative measures beyond GDP holds particular relevance for the Nordic countries, given their strong emphasis on social welfare, quality of life and environmental commitments. The Nordic model, characterised by a comprehensive welfare state and equitable social policies, aligns with the growing recognition that GDP alone does not capture the intricacies of societal well-being.
The Nordic countries have a history of pioneering progressive policies, and have already experimented in many cases with the use of alternative metrics. With our consistently high rankings in alternative indices as The World Happiness Report (Helliwell et al., 2024), the Nordic countries are well-positioned to lead the way in redefining success beyond traditional economic metrics. However, until now limited work exists analysing the Nordic countries collectively through the lens of beyond-GDP measures to understand their performance when evaluated differently and the policy implications of this. This report seeks to close this gap, and proceeds as follows:
The first section of the report situates the discourse on beyond-GDP metrics, offering an overview of the shortfalls of GDP and the different means of going beyond it. It uses the System of Environmental Economic Accounts (SEEA) as an example of extending the existing System of National Accounts (SNA) underpinning GDP, before discussing a number of frameworks sitting outside of these entirely such as the wellbeing and doughnut economy models.
The second section of the report provides an overview of the Nordic research, detailing the research methodology and summarising the three metrics which were selected for use: The Transitions Performance Index (TPI), the Sustainable Development Index (SDI) and the Doughnut Economy Indicators.
The third section undertakes a detailed, country level analysis of the 5 major Nordic counties of Denmark, Finland, Iceland, Norway and Sweden. Policy background relevant to the beyond-GDP analysis is provided, while performance according to each of the three metrics is discussed. The section finishes by comparing the performance of the Nordic countries to the EU average according to each metric.