a young man delivered a report

to the United States Congress

that 80 years on,

still shapes the lives of everyone in this room today,

still shapes the lives of everyone on this planet.

That young man wasn't a politician,

he wasn't a businessman,

a civil rights activist

or a faith leader.

He was that most unlikely of heroes,

an economist.

His name was Simon Kuznets

and the report that he delivered was called

"National Income, 1929-1932."

Now, you might think

this is a rather dry and dull report.

And you're absolutely right.

It's dry as a bone.

But this report is the foundation

of how, today, we judge the success of countries:

what we know best as Gross Domestic Product,

GDP.

GDP has defined and shaped our lives

for the last 80 years.

And today I want to talk about

a different way to measure the success of countries,

a different way to define and shape our lives

for the next 80 years.

But first, we have to understand

how GDP came to dominate our lives.

Kuznets' report was delivered

at a moment of crisis.

The U.S. economy was plummeting

into the Great Depression

and policy makers were struggling to respond.

Struggling because they didn't know what was going on.

They didn't have data and statistics.

So what Kuznet's report gave them

was reliable data on what the U.S. economy

was producing,

updated year by year.

And armed with this information,

policy makers were, eventually,

able to find a way out of the slump.

And because Kuznets' invention

was found to be so useful,

it spread around the world.

And now today, every country

produces GDP statistics.

But, in that first report,

Kuznets himself delivered a warning.

It's in the introductory chapter.

On page seven he says,

"The welfare of a nation can, therefore,

scarcely be inferred

from a measurement of national income

as defined above."

It's not the greatest sound bite in the world,

and it's dressed up in the cautious language of the economist.

But his message was clear:

GDP is a tool

to help us measure economic performance.

It's not a measure of our well-being.

And it shouldn't be a guide to all decision making.

But we have ignored Kuznets' warning.

We live in a world where

GDP is the benchmark of success

in a global economy.

Our politicians boast when GDP goes up.

Markets move

and trillions of dollars of capital

move around the world

based on which countries are going up

and which countries are going down,

all measured in GDP.

Our societies have become

engines to create more GDP.

But we know that GDP is flawed.

It ignores the environment.

It counts bombs and prisons as progress.

It can't count happiness or community.

And it has nothing to say about fairness or justice.

Is it any surprise that our world,

marching to the drumbeat of GDP,

is teetering on the brink of environmental disaster

and filled with anger and conflict?

We need a better way to measure our societies,

a measure based on the real things that matter to real people.

Do I have enough to eat?

Can I read and write?

Am I safe?

Do I have rights?

Do I live in a society where I'm not discriminated against?

Is my future and the future of my children prevented from environmental destruction?

These are questions that GDP

does not and cannot answer.

There have, of course,

been efforts in the past

to move beyond GDP.

But I believe that we're living

in a moment when we

are ready for a measurement revolution.

We're ready because we've seen,

in the financial crisis of 2008,

how our fetish for economic growth

led us so far astray.

We've seen, in the Arab Spring,

how countries like Tunisia

were supposedly economic superstars,

but they were societies

that were seething with discontentment.

We're ready, because today we have the technology

to gather and analyze data

in ways that would have been unimaginable to Kuznets.

Today, I'd like to introduce you to the Social Progress Index.

It's a measure of the well-being of society,

completely separate from GDP.

It's a whole new way of looking at the world.

The Social Progress Index

begins by defining what it

means to be a good society

based around three dimensions.

The first is, does everyone have the basic needs for survival:

food, water, shelter, safety?

Secondly, does everyone have

access to the building blocks to improve their lives:

education, information, health and sustainable environment?

And then third, does every individual have access

to a chance to pursue their goals

and dreams and ambitions

free from obstacles?

Do they have rights,

freedom of choice,

freedom from discrimination

and access to the the world's most advanced knowledge?

Together, these 12 components

form the Social Progress framework.

And for each of these 12 components,

we have indicators to measure how countries are performing.

Not indicators of effort or intention,

but real achievement.

We don't measure how much a country spends on healthcare,

we measure the length and quality of people's lives.

We don't measure whether governments pass laws against discrimination,

we measure whether people experience discrimination.

But what you want to know

is who's top, don't you? (Laughter)

I knew that, I knew that, I knew that.

Okay, I'm going to show you.

I'm going to show you on this chart.

So here we are,

what I've done here is put on the vertical axis social progress.

Higher is better.

And then, just for comparison,

just for fun,

on the horizontal axis is GDP per capita.

Further to the right is more.

So the country in the world

with the highest social progress,

the number one country on social progress

is New Zealand.

(Applause)

Well done! Never been; must go.

(Laughter)

The country with the least social progress,

I'm sorry to say, is Chad.

I've never been; maybe next year.

(Laughter)

Or maybe the year after.

Now, I know what you're thinking.

You're thinking, "Aha,

but New Zealand has a higher GDP

than Chad!"

It's a good point, well made.

But let me show you

two other countries.

Here's the United States —

considerably richer than New Zealand,

but with a lower level of social progress.

And then here's Senegal —

it's got a higher level of social progress than Chad,

but the same level of GDP.

So what's going on? Well, look.

Let me bring in the rest of the countries of the world,

the 132 we've been able to measure,

each one represented by a dot.

There we go. Lots of dots.

Now, obviously I can't do all of them,

so a few highlights for you:

The highest ranked G7 country is Canada.

My country, the United Kingdom,

is sort of middling, sort of dull,

but who cares —

at least we beat the French.

(Laughter)

And then looking at the emerging economies,

top of the BRICS, pleased to say, is Brazil.

(Applause)

Come on, cheer!

Go, Brazil!

Beating South Africa,

then Russia,

then China

and then India.

Tucked away on the right-hand side,

you will see a dot of a country with a lot of GDP

but not a huge amount of social progress —

that's Kuwait.

Just above Brazil

is a social progress superpower —

that's Costa Rica.

It's got a level of social progress the same as some Western European countries,

with a much lower GDP.

Now, my slide is getting a little cluttered

and I'd like to step back a bit.

So let me take away these countries,

and then pop in the regression line.

So this shows the average relationship

between GDP and social progress.

The first thing to notice,

is that there's lots of noise

around the trend line.

And what this shows,

what this empirically demonstrates,

is that GDP is not destiny.

At every level of GDP per capita,

there are opportunities for more social progress,

risks of less.

The second thing to notice

is that for poor countries,

the curve is really steep.

So what this tells us is that

if poor countries can get

a little bit of extra GDP,

and if they reinvest that

in doctors, nurses, water supplies,

sanitation, etc.,

there's a lot of social progress bang

for your GDP buck.

And that's good news, and that's what we've seen over the last 20, 30 years,

with a lot of people lifted out of poverty

by economic growth and good policies

in poorer countries.

But go on a bit further up the curve,

and then we see it flattening out.

Each extra dollar of GDP

is buying less and less social progress.

And with more and more of the world's population

living on this part of the curve,

it means GDP is becoming

less and less useful

as a guide to our development.

I'll show you an example of Brazil.

Here's Brazil:

social progress of about 70 out of 100,

GDP per capita about 14,000 dollars a year.

And look, Brazil's above the line.

Brazil is doing a reasonably good job

of turning GDP into social progress.

But where does Brazil go next?