Report on the capacity of existing models to incorporate wellbeing and sustainability indicators

One of the most pressing questions of this century is how countries can meet the basic needs of their 
citizens without overburdening the planet’s ecosystems. The mainstream economic paradigm is unfit 
to address this challenge, as it lacks a satisfactory description of how the economy is embedded 
within broader societal and environmental systems. To understand how societies can become 
sustainable and fair, economic models need to be expanded to include a more holistic depiction of the 
economy within its broader context. Several initiatives such as the Doughnut of social and planetary 
boundaries and the Sustainable Development Goals have paved the way by proposing a broader set of 
indicators that capture the social and environmental performance of society. 
This report analyses how capable current macroeconomic models are of simulating the transition to a 
more just and sustainable society. First, we assess how well-represented social and environmental 
indicators are in a sample of 50 models. Second, we investigate the methods that are used to model 
these indicators in a smaller targeted sample of 15 models. Last, we analyse which variables are 
commonly used to determine social and environmental outcomes. 
We find that most existing models lack a broad coverage of social and environmental indicators. The 
indicators with the best representation are those that can be easily linked to economic variables such 
as GDP, government spending, and household income. The best represented environmental indicators 
include climate change, energy use, land conversion, and water use. The best represented social 
indicators include jobs, income, economic development, and income equality. A key challenge is to 
include indicators that go beyond traditional macroeconomic thinking. These include less tangible 
social goals like life satisfaction and social support, and broad measures of environmental pressure 
like the ecological footprint. It is essential to represent a diversity of social and environmental 
indicators, as not including them runs the risk that they are not taken into account by policymakers.  
Models also need to better include environmental limits, such as those associated with the planetary 
boundaries framework, and social thresholds, such as those associated with meeting basic human 
needs. Of some concern, we find that most models lack a representation of feedback mechanisms 
from the environment and society back to the economy. Information in existing models tends to flow 
in one direction: from the economy to society and the environment, but not back the other way. We 
argue that modelers should rely less on monetary variables to model social outcomes and 
environmental pressures. Furthermore, modelers and policymakers should acknowledge the intrinsic 
value of different social goals, instead of treating them as means in the service of economic growth.  
Macroeconomic models are an essential decision-making tool for policymakers, but we find that 
existing models are inadequate to help societies navigate their way towards a sustainable future. To 
address this shortcoming, models should represent a wider variety of social and environmental 
indicators, and incorporate important thresholds and limits linked to these. Moreover, they should 
include a more holistic depiction of the interactions between environmental, societal, and economic 
systems. By adopting this broader perspective, policymakers will be better able to prioritize human 
and planetary wellbeing instead of economic growth.