Limitations of GDP and the shift toward measuring subjective well-being

Discussions regarding the limitations of Gross Domestic Product (GDP) as a sole measure of societal progress highlight the gap between economic growth and actual human well-being. While GDP tracks the value of goods and services, it often fails to account for inflation, wealth concentration, unpaid domestic labor, and environmental degradation. For instance, in Mexico, the costs associated with natural resource depletion and environmental damage were estimated to equal 4.1 percent of the GDP in 2024.

To address these limitations, the government of Navarra has introduced subjective well-being as a new dimension for analyzing the community's reality. This initiative aims to complement objective economic and social indicators—such as employment, income, and life expectancy—by incorporating the lived experiences and perceptions of citizens. The goal is to better understand how economic shifts translate into daily life, acknowledging that improvements in macro-level data do not always equate to improved quality of life for all individuals.