Money can’t buy you love, says the song, but can GDP buy prosperity? The question is an important one given the emphasis that the White House and Congress have placed on pushing GDP growth to its limits.
What do the data say? My favorite measure of overall prosperity is the Social Progress Index (SPI), which has just been updated for 2018. The SPI is a comprehensive measure of human flourishing that draws on a broad set of indicators of public health, education, safety, human rights and personal freedoms. It purposely omits purely economic indicators such as GDP, inflation, or income distribution, which makes it especially well-suited to address the question of how GDP is related to noneconomic indicators of prosperity.
The following chart shows the relationship between the SPI and GDP for the 146 countries in the SPI database. The horizontal axis measures 2018 GDP per capita using estimates from the July 2018 update of the IMF’s WEO database, expressed I 2011 constant dollars at purchasing power parity.