Reconstruction of Economic Welfare Indicators from GDP to Falah in the Perspective of Islamic Economics

Abstract

Gross Domestic Product (GDP) remains the dominant measure of national welfare, yet its materialist orientation generates paradoxes of rising inequality, environmental degradation, and neglect of spiritual and psychological well-being. This study aims to reconstruct an economic welfare indicator that moves beyond GDP toward a non-compensatory falaḥ-based composite index grounded in maqāṣid al-sharīʿah. Employing a qualitative conceptual design that combines content analysis with conceptual mathematical modelling, the research develops a multidimensional Falah Index that integrates classical fiqh categories with contemporary positive-psychology constructs (subjective well-being and PERMA) and adopts a non-compensatory geometric-mean aggregation rule with a critical threshold of τ = 0.40. The proposed framework addresses four literature gaps: inadequate measurement of spiritual qualities, the divide between classical maqāṣid and modern well-being science, the absence of non-substitutable aggregation, and the gap between normative discourse and policy practice. Theoretically, it advances Islamic economics by offering an operational bridge between maqāṣid al-sharīʿah and Post-GDP metrics; practically, it provides policymakers with a coherent alternative for evaluating national progress that prioritises substantive human flourishing over mere output expansion. Future empirical validation across OIC countries is recommended.