Financial analysts, rating agencies and national governments are often obsessed with analyzing the next set of economic data, especially the ups and down of GDP — a key macro-economic indicator — which usually reflects the health of an economy.

The reason for this obsession is that many local investment decisions and ones that generate further Foreign Direct Investment are based on GDP data, since it is one common indicator used by international investors to judge a country’s performance. Geo-political factors and country risk are also important indicators that are taken into consideration as well.

GDP figures are usually published as interim quarterly data and a final annual figure, after subsequent revisions. A “good” GDP figure makes headlines, even if the change is a mere 0.2 or 0.3 percent above the previous quarter figure. For large economies, the smallest differences can compound to a large difference in national income over time.

As many economists can attest, measuring GDP is a complicated process as data is collected from a variety of sources, either official or from third-party international agencies, such as the International Monetary Fund, if national data is not available.

This uncertainty about the veracity of data and its sources, and the fact that GDP is only one way of measuring the state of the economy’s health, gives rise to a debate about its use, as some data is collected on a regular basis while other data, such as agricultural output or retail sales, has large seasonal variations. For instance, an accurate quarterly GDP data supported by high festive-season retail sales is not a good indicator of the trend in the overall economy.

GDP data does not take into account the qualitative improvement in goods, it only includes the value of the products produced. Other issues are definitional ones, as some financial outputs, such as fees charged for advisory work or bank overdrafts, can be more easily reported, while trading activities, such as in derivatives, are more complex.

Economists are divided on categorizing several economic activities, such as whether to include unpaid housework in GDP calculations, including home care for elders or looking after children. These economic activities are not added in monetary terms but make an immense contribution to the well-being of society.

However tempting it is to have one single indicator summarizing whether things are getting “better” or “worse” in economic terms for society as a whole, GDP figures cannot do so as they only measure the monetary value of goods and services over a period of time and do not indicate the state of society’s happiness and well-being.

Even though income and purchasing power are major concerns, people are becoming increasingly willing to sacrifice their financial status at the expense of a sustainable future, which contains non-material objectives such as air quality and work-life balance.

The loud voices advocating the balance of an environmentally conscious lifestyle and economic growth during the recent Glasgow COP26 climate meeting were a testimony to this growing public mood.

The need for sustainability introduces a set of trade-offs between choices that will boost current living standards with choices that will safeguard future living standards, and if translated at the political level, policy makers have to take note of such national preferences.

It is no coincidence that surveys of happiness levels in countries with high GDP levels show low societal happiness, compared with poor countries having higher levels of citizen happiness. It could just be that being economically poorer but having a stronger community spirit is more important to such societies than being financially comfortable.

This is an idealistic assumption though. Some countries, such as India, and especially China, have aggressively pursued double-digit GDP growth to take millions of their citizens out of poverty and into more comfortable economic settings.

So, the next time national GDP data is rolled out, it is important to raise some of the above questions and go beyond the data. Rating agencies should also take such non-economic considerations into account in their final country rating, but that is another story.

• Dr. Mohamed Ramady is a former senior banker and Professor of Finance and Economics, King Fahd University of Petroleum and Minerals, Dhahran.