Is a Country Truly Wealthy if it has High GDP, but its Citizens are Unhappy?

Charlie Webster, grey court school

GDP is the headline when measuring the activity of the economy. It measures the total monetary value of all final goods and services produced within a country's borders over a specific period. In the UK, real GDP per head rose by 0.6% in the first quarter of 2026 and was 0.9% higher than a year earlier. The positive number sounds encouraging to the human ear however the same month, the Office for National Statistics reported that 24.6% of adults found it fairly or very difficult to get by financially. Furthermore, other statistics tell a similar story, as the average male healthy life expectancy in the UK has fallen to 60.7 years, and we are in a climate and nature crisis – the UK is one of the most nature-depleted countries in the world and last summer experienced multiple record-breaking heatwaves.

These values expose a problem: GDP growth and human progress are not the same thing. Walking through my town, Britain looks prosperous. There are busy restaurants and full shopping centres, yet conversations among my generation involve the cost of university, graduate salaries and whether we will be able to afford a home in the future. It made me wonder whether a country can become richer in aggregate while becoming less secure for the future generations that will inherit it.

That question led me to research the history of economics. Adam Smith was interested in the goods and conveniences available to people, but Aristotle had a different emphasis: wealth was a means to human flourishing rather than being an ultimate goal of life. Modern economists such as Richard Layard have continued the debate, asking whether economic policy should ultimately be judged by its effect on people's lives rather than by economic output.

The environmental aspect worsens the problem. Dieter Helm argues that natural wealth is a stock, not a flow. A forest or healthy soil is an asset capable of generating benefits over time. If we use up these finite natural resources, this may cause an increase in GDP, but the stock can fall. This means that we are consuming part of the wealth available to future generations. GDP tells us about the flow of production during a particular period. It does not tell us whether the stocks of natural, human or produced capital that support future prosperity are increasing or being depleted.

Inequality also creates problems when measuring economic growth. Two countries could have the same GDP per head while distributing their income and wealth very differently. Thomas Piketty's work has shown how wealth can become increasingly concentrated upwards when the return on that wealth exceeds the rate of economic growth. This trend benefits those with assets and leaves behind people reliant on wages, putting assets out of their reach. The size of the pie might grow, but much of the pie becomes inaccessible. The World Inequality Report estimates that the richest 10% own around three-quarters of global wealth, while the bottom half own around 2%. This means the distribution of wealth and economic growth is as important to society as its size.

I attempted to create a more representative measure of prosperity:

Wealth W = (Y/N) × (1 − G) × S × (Nc/Nc₀)

The equation uses the economic measure GDP per capita (Y/N) but factors in societal and environmental measures including the gini coefficient (G) that adjusts for inequality, life satisfaction (S) that represents wellbeing, and a natural capital ratio (Nc/Nc₀).

The formula is flawed, partly because there is no official natural capital ratio and valuing nature is complicated. However, the process of devising it showed me the difficulty of measuring prosperity. Instead of creating one all-encompassing measure, perhaps GDP should always be accompanied by other measures that give it context.

I proposed that a national ledger should incorporate GDP alongside a prosperity ledger that includes natural capital, wealth distribution, health, satisfaction and intergenerational liabilities. This will help ensure the costs of economic growth are made visible and action can be taken to protect the things on which economies depend.

A genuinely wealthy and happy country may not be the one with the highest GDP. It may be the one that can produce prosperity without exhausting the resources, opportunities and wellbeing of the people who come after us.

References

Aristotle. Nicomachean Ethics. (Trans. Ross, W.D., Oxford University Press, 1998.)

Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations.

Office for National Statistics (2026). Beyond GDP Insights, UK Measures of National

Well-being: June 2026.

Layard, R. (2024). Value for Money: How to Improve Wellbeing and Reduce Misery. LSE.

Piketty, T. et al. (2025). A Tale of Two Rates. Review of Political Economy.

Helm, D. (2015). Natural Capital: Valuing the Planet. Yale University Press.

Sen, A. (1999). Development as Freedom. Oxford University Press.

ONS (2025). UK Natural Capital Accounts 2025.

World Inequality Report (2026). wir2026.wid.world.