Economics, happiness and climate change: exploring new measures of progress

Abstract This research explores the relationship between environmental sustainability, well-being, and economic output, specifically critiquing the predominant reliance on GDP as the main progress indicator. The study selects variables such as GDP, well-being metrics, and environmental indicators based on their critical roles in reflecting both economic performance and its broader impact on societal and planetary health. By evaluating prominent indexes such as the Human Development Index (HDI), Planetary pressures–adjusted Human Development Index (PHDI), the Sustainable Development Goals (SDG) Index and the Happy Planet Index (HPI), this paper highlights the limitations of GDP and the need for a multi-dimensional measure that accounts for the well-being of people and the planet. The findings suggest a positive correlation between GDP and certain environmental degradation metrics, reinforcing the need for sustainable economic models. Drawing from both quantitative and qualitative insights, we advocate for a paradigm shift towards a “happy economy”, and suggest that policymakers should consider integrating environmental and social well-being indicators into the System of National Accounts, and adjust fiscal policies and investment strategies to promote sustainable practices that reduce ecological footprints while enhancing quality of life.