Last week, on the same day that we learned economic growth in the UK was running at a miserly 0.2%, the Office for National Statistics launched a new programme of work on measuring human well-being.

The latter was the result of a month-long survey in which the public were asked what mattered to them. To barely disguised yawns, the answers that came back were, "family, friends, health, financial security, equality and fairness in determining well-being", according to national statistician Jill Matheson.

So we were caught on one hand between a low-grade, generalised fear that people weren't buying enough stuff to keep the economy going, and being told on the other hand something we already knew deep down: that a better quality of life stems not from consuming more, but from a range of mostly immaterial things. Crucially, in a society like the UK, enjoyment of these does not correlate in any positive, straightforward manner with economic growth. On the contrary, some policies used to promote growth can directly undermine a range of the factors that do contribute to well-being, such as the time we need to spend with family, health, equality and fairness.

Depending on how it is pursued, economic growth can be jobless, socially divisive and environmentally destructive. It can, in other words, be "uneconomic growth". In a quite extraordinary intervention, as part of the government's desire to cut spending on public services, Oliver Letwin, the coalition's policy minister, recently suggested that "fear" of losing your job should be used to increase the productivity of workers.

This approach appears to be wrong on so many levels that I first thought it had to be a spoof. It will do nothing for growth; it chronically misunderstands how to get the best out of people; it contradicts the prime minister's own public conversion to the importance of well-being at work and, perhaps most importantly, it misunderstands real productivity.

In professions like health and education, if you drive out costs (ie people) you get a worse service. Quality of care and nurturing depends to a huge degree on attentive human contact in a convivial context. Subject people to old-fashioned Taylorist production-line management, coupled with the intimidation of a threatened job loss, and nobody wins.

It is wrong, also, because buried in this conundrum, may also be the secret of how, in the long term, we align our livelihoods and lifestyles with the limited planet on which we depend. This is about designing an economy of better, not more. And that suggests fundamentally rethinking what we mean by efficiency and productivity.

An economy that is more based on services, and in which we are sharing, repairing, recycling, reusing, learning, collaborating and coproducing services (that's the jargon, at any rate – it just means give and take) is one in which, ultimately, we may have more people doing fewer things in formal paid employment. In that context, we might have more time for "family, friends, health", and all the things that do add to our well-being.

The big objection is that growth is needed for jobs, and that these are what we need for financial security. On one level, yes, of course. However, financial security is also a function of equality and fairness, and given other economic problems (such as that many of the jobs created in a push for growth alone do not deliver financial security) as well as environmental constraints, there may be more reliable paths to find security. Inequality both creates insecurity and raises a society's costs in relation to health problems, crime and almost everything else.

Redistribution of income and access to employment, therefore, compared with generalised, unequal and resource-hungry growth, can be quicker, less destructive and a more effective way of delivering security.

A sensible approach to enhance economic activity in a way that met many needs would be to take Vince Cable's suggestion of another round of quantitative easing, but instead of just spraying a general injection of cash via the banks (who take a cut) into the economy, to channel it into the productive low-carbon economy – a sort of green easing.

Sadly, that doesn't look likely to happen any time soon. For now the captain of this ship insists we're all heading south, when there are all kind of indicators telling us that our real needs can only be met by going north.