The recent unveiling of the Commonwealth Treasury’s Measuring What Matters framework represents another step forward in Australia’s journey towards better understanding and measuring national prosperity. While Treasurer Jim Chalmers presented this framework as “Australia’s first national wellbeing framework, to help better track outcomes in our economy and society”, its fundamental ideas are not new.

Australia’s history with wellbeing dashboards and alternative measures of progress dates back more than 50 years, reflecting the nation’s acknowledgement of the importance of considering wellbeing within economic policy. It began with the release of seminal  Treasury papers such as The Meaning and Measurement of Economic Growth (1964) and Economic Growth: Is it Worth Having? (1973). These early documents marked a significant shift in Australia’s understanding of progress, questioning the sole reliance on economic growth as an indicator of national welfare. Subsequently, in October 1997, Treasury’s mission statement was amended to include wellbeing as an institutional objective, emphasising the nation’s commitment to a more holistic approach to advancing national prosperity.

Building on this foundation, Australia’s pursuit of a wellbeing framework continued to evolve. Initiatives like the Treasury wellbeing framework in the early 2000s and later iterations demonstrated ongoing efforts to align policies with broader societal goals. Additionally, the Australian Bureau of Statistics played a pivotal role in developing Measuring Australia’s Progress (MAP) in 2002. MAP indicators arose from a wide-ranging consultation process, arriving at 15 headline indicators of national progress.

Ten years later, another national consultation process saw a broadening of MAP indicators to 26. MAP’s success and international interest set the standard for other nations to explore comprehensive progress measurement. While the most recent Measuring What Matters consultation process (yielding yet a broader set of 50 indicators) represents an evolution of Australia’s journey in understanding progress in more holistic terms, such dashboards are unlikely to compete with GDP growth as a policy focus.

Limitations of dashboards and composite indices

Dashboards are valuable storytelling tools, presenting a comprehensive view of a nation’s prosperity by tracking a broad range of indicators of economic and social wellbeing including health, education, housing, income and wealth distribution, life satisfaction, community cohesion, environmental wellbeing and more. However, they often fall short in providing a clear understanding of overall progress. Indicators may show differing trends over time, some will increase, while others decrease, making it challenging to assess overall national prosperity. In addition, it treats each indicator in isolation, giving little consideration to their interconnectedness which would assist in prioritising policy efforts and optimising resource allocation. For example, prioritising full employment is likely to have positive knock-on effects for mental health, financial security, housing, crime and life satisfaction.

Composite wellbeing indices have also been developed to measure national prosperity. While they can provide a valuable overarching view of societal progress, they have several significant challenges.

Firstly, countries place different levels of importance on the various indicators or characteristics of societal wellbeing. Selecting indicators that all nations agree on and determining how to weigh and combine data based on diverse value systems can hinder standardised international uptake, thus reducing the application of these composite indices for global assessments.

Secondly, the relative stability of composite scores over time can generate complacency among policymakers, driven by a lack of perceived urgency for immediate action when an index shows little fluctuation over time. As an illustration, the 2023 Legatum Prosperity Index provides a summary of prosperity scores spanning 2013 to 2023 for different regions of the globe. The graph demonstrates relatively consistent scores for all regions and globally throughout the entire 10-year timeframe. Similarly, the ‘prosperity score’ for Australia showed little variation over the same period, holding steady at around 79 (79.0 in 2013 to 79.4 in 2023).

To drive meaningful change, we need a dynamic and universal approach to progress measurement that enables prompt, timely and targeted policy interventions. This requires an overarching measure of progress that goes beyond traditional prosperity metrics. This measure should reflect fluctuations in social wellness, be integrable into national accounts, and represent a nation’s overall wellbeing and prosperity. Without it, GDP will continue to dominate as a privileged indicator, with policy decisions continuing to prioritise economic growth over societal wellbeing.

Introducing Mental Wealth as an overarching measure of national prosperity

Mental Wealth is emerging as a promising alternative metric of national prosperity, which extends (rather than replaces) GDP by incorporating the monetary value of social production: the unpaid contributions made by individuals and communities to society. Social production is the glue that holds complex societies together. It fosters community wellbeing, supports our ability to be economically productive, improves environmental wellbeing, and provides nations with surge capacity to respond to crises and bolster their resilience.

All 50 indicators presented in the Commonwealth’s latest wellbeing framework contribute to the Mental Wealth of the nation. When factors such as mental and physical health, social cohesion, environmental wellbeing and living conditions improve, it reflects positively in the value generated by the nation’s overall economic and social productivity and production. Mental Wealth therefore provides a dynamic measure of the strength (and good management) of a Wellbeing Economy.

By adopting Mental Wealth as an overarching indicator, policymakers gain an improved understanding of the interdependence of a healthy economy and a healthy society. Fluctuations in Mental Wealth reflect both the expansion and contraction of economic and social production, prompting more informed, coordinated and timely policy actions. Further, Mental Wealth provides a tractable, feasible and universally standardisable approach to monetising the value of social production that can be integrated into systems of national accounts.

To achieve a holistic and effective measurement of national prosperity, we must move beyond traditional dashboards and composite indices. By embracing Mental Wealth as an overarching metric, policymakers can prioritise the wellbeing of the economy and society together, encouraging action and progress towards a more secure, healthy, sustainable, cohesive and prosperous Australia.

  Associate Professor Jo-An Occhipinti is co-director of the Mental Wealth Initiative and head of systems modelling, simulation and data science at the Brain and Mind Centre, University of Sydney.

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