New Happiness Index shows British society peaked in 1976

Britain was in the grip of inflation, drought, and punk rock. The cold war was in remission, the IMF bailed out the economy, and the Muppets and Starsky and Hutch were on TV.

It hardly sounds like the halcyon days of a golden era. But according to new research from a London think tank, 1976 was the year when Britain peaked as a society. Since then, Britons may have become more prosperous and more technologically advanced, but at such a social and environmental cost as to weigh negatively on the overall quality of life.

The report by the New Economics Foundation (also dubbed the Gross National Happiness Index ) is the latest salvo in an ongoing global debate over how to measure progress. Some US cities have created their own quality of life or "sustainability" indexes that include crime, health, environmental, and cultural factors. Canadian, British, and Scandinavian governments have added a catalog of new social and environmental yardsticks, too.

Understanding that, however, hasn't stopped economists and social commentators here from balking at the idea that a period in British history often known for industrial unrest, bellbottoms, and terrorism can be considered the apogee of anything.

Some doubt that after a generation of economic growth and exponential technological change, British citizens are really worse off now than almost 30 years ago.

And yet the study insists that this is just the point: traditional measurements of progress, it says, heavily favor the economic over the social, and are becoming outmoded. Becoming bigger, faster, and richer is only part of the story.

"As everyone from Mahatma Gandhi to cult pop-group the Black Eyed Peas (and even Tony Blair) has pointed out," says the report, "more isn't always better."

Take a headline indicator like GDP, or gross domestic product. It goes up, the economy's growing (good news), it goes down, the nations is in recession (bad news). Yet, as Dutch economist Sander Tideman explains, this is far too simplistic.

If you cut down a forest and sell the timber, if you refine chemicals but spew toxic waste into a river, if you manufacture fighter jets for clients in the developing world: all will increase the GDP, he says. But the negative costs associated with each doesn't figure into the calculation.

"It's like just measuring to see whether your stomach is full or not - it doesn't tell you much about the rest of the body," says Mr. Tideman, who runs Spirit in Business, a consulting firm in Amersterdam. "And there comes a point where you can't put any more in."

The problem is that if governments are not looking at the right indicators they will not set themselves the right policy goals, he says. For example, earlier this month British finance chief Gordon Brown congratulated himself on presiding over the strongest GDP growth for 200 years. "But most people don't really care whether the economy grows by a few points," says Tideman. "These abstract numbers have very little relevance to ordinary people; it's time for politicians to look at the things that really matter to people."

Tim Jackson of the University of Surrey, who wrote the New Economics Foundation (NEF) report calls GDP "the myth of economic progress," a convenient framework that gives people the impression of advancement but it fails to measure progress adequately.

"It puts all the eggs in one basket, without paying attention to some other things like the level of inequality, the distribution of income, the level of crime in society, the environmental impact that generates that growth," says Jackson, a professor of sustainable development. "If the economy is growing and we have more money in our pockets but it isn't making us any happier, isn't that a good reason to reexamine how we measure progress?" he asks.

More orthodox economists challenge some of the NEF assumptions. Jonathan Loynes, an economist with a London business consultancy, Capital Economics, agrees that GDP is a narrow measure of prosperity and progress, but maintains that it is relevant to people's lives.

It's indisputable, he says, that when GDP goes into reverse, the average person suffers. "What most people don't want is to lose their jobs, struggle to pay mortgages, have houses repossessed, and that is that sort of thing that happens in a recession," he says.

Still, the NEF index is an idea being touted by an international network of economists, environmental groups, and sustainable development experts that want a more sophisticated measurement of quality of life - what some refer to as Gross National Happiness. It's a concept that Bhutan is already toying with, and the Asian mountain kingdom held an international conference last month on refining the measure.

The NEF - a economic, social, and environmental research group - says that its Measure of Domestic Progress (MDP) starts with consumer spending, and includes 20 other economic, social, and environmental factors - such as crime costs, air and water pollution, the breakdown of families, and loss of farmland. NEF figures that while GDP per head rose by 80 percent over the past 30 years, the quality of life fell throughout the 1980s, rose in the late 1990s, but has yet to recapture its 1976 peak.

It notes, for example, that while water and air quality have improved, environmental costs have increased 300 percent since 1950. Crime rose 13-fold during the same period, peaked in 1992, and is rising again.

Some governments are cautiously listening, though Hetan Shah, director of NEF's Well being Programme, admits that many are cagey about altering the way they measure progress.

And statisticians warn that governments will be wary of integrating every piece of data into one single, holistic measure that supposedly will tell us if life is getting better or worse. "You have to ask if that exercise useful or not," says Ian Scott at Britain's official number-crunching organization, National Statistics. "What is important for the statistician is whether you can measure something and whether the measurement actually means something."