Economics

When measuring wellbeing, GDP is not the whole story

13/05/2026

WU economists show why supplementary indicators are needed in addition to GDP

The gross domestic product (GDP) is a key indicator of economic performance, and it shapes debates about growth, purchasing power, and the standard of living in Austria. It is often used to compare the quality of life across countries. WU economists Klaus Prettner and Junlai Zhang show which complementary indicators are needed to add factors like health and education to the picture and measure wellbeing more comprehensively.

GDP as a proven indicator with limits

Photo Klaus Prettner

Gross domestic product (GDP) measures the productivity of an economy and is one of the most important economic indicators. Due to its good data availability, it is often used in political debates to compare prosperity between countries or to evaluate economic progress. However, research has long pointed out that GDP alone does not adequately reflect prosperity. For example, GDP per capita often rises after wars or natural disasters, even though the population's well-being deteriorates because reconstruction investments boost growth in the short term. Inequality, educational opportunities and health are also not taken into account. "We need complementary perspectives to GDP in order to better assess prosperity," says Prof. Klaus Prettner, economist at WU Vienna.

Austria-USA comparison shows added value of the supplements

Photo by Junlai Zhang
© Junlai Zhang

A comparison of Austria with the USA illustrates the additional insight that supplementary prosperity indicators can provide. While the USA is clearly ahead of Austria in terms of GDP per capita, this picture is put into perspective when health and distribution are taken into account - factors that also play a central role in Austrian social and economic policy. The Inequality-Adjusted Healthy Lifetime Income (IHLI) indicator measures income over a healthy lifetime, taking inequality into account. in 2022, the IHLI in Austria was around 3.2 million international dollars per person, in the USA around 2.8 million. "Particularly in rich countries, supplementary indicators reveal structural differences that GDP alone does not show," says Dr. Junlai Zhang, economist at WU Vienna and Heidelberg University.

New database with supplementary indicators

Although alternative well-being indicators have already been developed, they are often only available for individual countries or short periods of time, or the measure itself defies economic interpretation, such as the Human Development Index (HDI). Prettner and Zhang have therefore founded the Global Wellbeing Economics Lab together with colleagues from Harvard and Heidelberg Universities, Peking Union Medical College and the International Institute for Applied Systems Analysis (IIASA). The freely accessible platform bundles internationally comparable and economically interpretable indicators on income, health, education, the environment and inequality and thus also enables Austria to be classified in an international comparison. "Our aim is to provide indicators in addition to GDP and to prepare them in an understandable way in order to support evidence-based political decisions," says Dr. Zhang.

Source

Prettner, Klaus, Zhang, Junlai, Bloom, David E., Chen, Simiao, Lutz, Wolfgang (2026): GDP alone cannot measure human progress and well-being. In: Nature Health (2026). Available at: doi.org/10.1038/s44360-026-00137-7

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