Britain was in the grip of inflation, drought, and punk rock. The cold war was in remission, the IMF bailed out the economy, and the Muppets and Starsky and Hutch were on TV.

It hardly sounds like the halcyon days of a golden era. But according to new research from a London think tank, 1976 was the year when Britain peaked as a society. Since then, Britons may have become more prosperous and more technologically advanced, but at such a social and environmental cost as to weigh negatively on the overall quality of life.

The report by the New Economics Foundation (also dubbed the Gross National Happiness Index ) is the latest salvo in an ongoing global debate over how to measure progress. Some US cities have created their own quality of life or "sustainability" indexes that include crime, health, environmental, and cultural factors. Canadian, British, and Scandinavian governments have added a catalog of new social and environmental yardsticks, too.

Understanding that, however, hasn't stopped economists and social commentators here from balking at the idea that a period in British history often known for industrial unrest, bellbottoms, and terrorism can be considered the apogee of anything.

Some doubt that after a generation of economic growth and exponential technological change, British citizens are really worse off now than almost 30 years ago.

And yet the study insists that this is just the point: traditional measurements of progress, it says, heavily favor the economic over the social, and are becoming outmoded. Becoming bigger, faster, and richer is only part of the story.

"As everyone from Mahatma Gandhi to cult pop-group the Black Eyed Peas (and even Tony Blair) has pointed out," says the report, "more isn't always better."

Take a headline indicator like GDP, or gross domestic product. It goes up, the economy's growing (good news), it goes down, the nations is in recession (bad news). Yet, as Dutch economist Sander Tideman explains, this is far too simplistic.

If you cut down a forest and sell the timber, if you refine chemicals but spew toxic waste into a river, if you manufacture fighter jets for clients in the developing world: all will increase the GDP, he says. But the negative costs associated with each doesn't figure into the calculation.

"It's like just measuring to see whether your stomach is full or not - it doesn't tell you much about the rest of the body," says Mr. Tideman, who runs Spirit in Business, a consulting firm in Amersterdam. "And there comes a point where you can't put any more in."

The problem is that if governments are not looking at the right indicators they will not set themselves the right policy goals, he says. For example, earlier this month British finance chief Gordon Brown congratulated himself on presiding over the strongest GDP growth for 200 years. "But most people don't really care whether the economy grows by a few points," says Tideman. "These abstract numbers have very little relevance to ordinary people; it's time for politicians to look at the things that really matter to people."

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