– Report advises a switch from a focus on GDP to ‘wealth accounting’
– Preliminary research shows multiple perspectives needed for effective carbon accounting
– Initial findings show stronger economies require higher levels of social trust
As the consequences of climate change, social tensions and high levels of inequality are increasingly evident, the Bennett Institute for Public Policy at the University of Cambridge, led by Professor Diane Coyle, has published an initial report on how to improve economic measurement in order to guide effective economic policymaking.
The report recommends focusing on an alternative measurement framework based on the “wealth economy” rather than just GDP: wealth is determined by the access to a range of economic assets people need to fulfil their economic potential and the long-term capacity of the economy to deliver sustainable growth and improving living standards.
The forward-looking element of this new economic framework makes it a better indicator of sustainability in terms of the economy and society as well as the natural environment than annual output or GDP.
This ambitious framework requires measurement of access to six types of economic assets that add up to what is known as comprehensive wealth of the nation.
1. Physical assets and produced capital, including access to infrastructure and to new technologies
2. Net financial capital
3. Natural capital, the resources and services provided by nature
4. Intangible assets such as intellectual property and data
5. Human capital, the accumulated skills and the physical and mental health of individuals
6. Social and institutional capital