Redefining Development: Different Times Call for Different Measures

Abstract: This thesis examines the relationship between economic growth and sustainable wellbeing. It evaluates the ability of GDP per capita to capture a how efficiently a country delivers long, happy lives using the limited environmental resources available, as measured by the Happy Planet Index (HPI). The purpose of the study is to see if a measure such as the HPI would be more appropriate than GDP per capita for guiding policy to ensure sustainable development. Using a dataset of 151 countries over 14 years, GDP per capita is compared with HPI scores. The HPI is a composite measure of a country’s average life expectancy and experienced wellbeing, divided by the country’s per capita ecological footprint. After running a series of correlation analyses and a series of fixed effect panel regressions it is concluded that GDP per capita has a slight ability to predict a country’s HPI score. There is proven to be a positive relationship up until the point where a country’s GDP per capita is approximately US$1600 - US$3900. There are however ninety countries in the dataset with a GDP per capita above US$3900. This leads to a conclusion that there is a need for more of a pluralism approach in economics where GDP and a measure such as the HPI can be used alongside each other to guide policymaking in a sustainable direction.