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Measuring Well-Being: W3 Indicators to Complement GDP

Economic Bulletin of May 13, 2013

By: Marco Giesselmann, Richard Hilmer, Nico A. Siegel, Gert G. Wagner in: DIW Economic Bulletin 05/2013.

Plenty of people in Germany, including politicians and researchers, believe that gross domestic product (GDP) is an outdated indicator of a society’s prosperity. Therefore, at the end of 2010, the German Bundestag, the federal parliament, established a study commission (Enquete Kommission) tasked with developing an alternative to GDP for measuring growth, wealth, and quality of life. This commission has now submitted a proposal: to complement GDP with nine additional indicators, covering a wide range of areas such as the distribution of income, biodiversity, and life expectancy.

Replacing gross domestic product with a single alternative index was rejected by the commission, however, since it is not possible to reduce citizens’ very different wishes and expectations to »a common denominator.« The ten indicators cover three dimensions of wellbeing— economy, ecology, and social wealth—and hence are called W3 indicators.2 This name, which emphasizes the equal importance of the three dimensions, is concise and memorable enough to position itself alongside GDP.

Measuring Well-Being: W3 Indicators to Complement GDP (PDF, 0.62 MB)