Home / Economy, Employment and Growth / INTERACTIVE MAP: Money makes the world go round, but a perfect measurement of Wellbeing does not exist | Create your Better Life Index with Social Progress Imperative

INTERACTIVE MAP: Money makes the world go round, but a perfect measurement of Wellbeing does not exist | Create your Better Life Index with Social Progress Imperative

Jasper Bergink puts into perspective  the  European Commission expert conference on ‘beyond GDP’ that ties up with his article in Next Generation for Europe magazine NGE Magazine 1.

In the conference, Enrico Giovannini, a former Italian Minister and OECD Chief Statistician, contested that the ‘battle of measurement’ has been won. In comparison to ten years ago, national statistic offices do a lot more effort to measure what matters.

Routine measurements of social and environmental indicators -like generated waste, emission of green house gasses and water use  –  allows us to get a broader understanding of quality of life than economic growth and inflation could give us. And new indices like the OECD Better Life Index treat all indicators equally.

OECD

Money makes the world go round, and GDP measures it

According to Jasper Bergink, for too long, Gross Domestic Product (GDP) has been the key indicator for public policy. GDP emerged in the 1930s as a metric to measure the size of national accounts and has developed into a tool to benchmark countries’ performance: GDP growth is equated to progress.

Along the way, many  have challenged this dominance, arguing that a good society is a lot more than economic performance. Social and environmental externalities are discounted in GDP. For instance, economists calculated that the Gulf of Mexico oil spill resulted in a higher GDP! And even GDP’s creator, economist Simon Kuznets, was aware of these limitations. When preparing the pile of statistic data for the US Congress in 1933, he noted that: The welfare of a nation can scarcely be inferred from a measurement of national income.

Other competing indices aim to rebalance GDP, by providing economic performance and add other data in areas as social matters, environment and education. This is the case for indicators like the Humanitarian Development Index (HDI), the OECD’s Better Life Index and Bhutan’s Gross National Happiness.

Annie Quick, reports on opinions of politicians and leaders from business and civil society on how to measure our national success.

The current prominence of Gross Domestic Product (GDP) fails to focus our government on the economic, social and environmental outcomes that really matter.

What’s New?

The five new headline indicators, because whatever replaces GDP needs to be just as simple and evidence shows that people are only able to hold between three and five meaningful pieces of information in their heads at once.

The need to dethrone GDP as the primary aim of government was apparent, and soon the conversation moved on to what wasn’t included.

What about poverty?
What about green spaces, our education system, our mental health, biodiversity?
Do the indicators pay enough attention to the social and the collective, to the distributions behind the averages?

Annie Quick, goes on to say that it’s an exciting time for alternative headline indicators across the UK. Wales have just finished consulting on a set of 40 indicators, and Scotland currently have 50. Both are considering new approaches and it will be interesting to see whether they end up adopting a smaller number of indicators to act as headlines. On a UK level, there are 17 internationally-agreed sustainable development goals, with a challenge now of how to translate these into headline indicators for the UK.

Choosing a small number makes for some tough decisions but when it comes to headline indicators, less really is more.

The Social Progress Imperative because social progress does not equate happiness

The main use of the Social Progress Imperative – SPI as a policy tool is that it is adds knowledge on progress without building on economic data. From that perspective, it may be surprising that there nevertheless is a solid correlation of 0.78 between GDP and SPI. But SPI allows policy makers to make assessment from a different angle. The main benefit is to identify areas where a country is shortcoming comparing to peers with similar GDP levels, and to strengthen the information base about interventions that can address lower performance.

In recent years, policy makers’ interest in beyond GDP indicators has steadily risen. The SPI is also benefiting from this. The European Commission has started talks to integrate the SPI to monitor regional policy outcomes. And in the US, where social progress and happiness are lagging behind economic strength, several local and state level politicians have started to integrate SPI information in their dashboard of monitored outcomes. For instance, the city of Somerville, Massachusetts, has started analysing tailored SPI analytics on the local level. And in the state of Michigan, social progress indicators are included in a set of key performance indicators.

Jasper Bergink offers his own conclusions: A perfect measurement of well-being does not exist. Similarly, a ‘dashboard’ with eleven different figure as in the OECD Better Life Index can be difficult to apply. GDP has a value. Economic data provide a useful understanding about people’s lives. But if you want to find out what a good society is, and whether you are on an upward or downward trend, there is a lot more to watch. GDP also has been refined often. It’s better to refine measures and policies of well-being on the way than to never start the journey. The SPI provides a great contribution to help policymakers find out on which areas they should work to make their country progress. Beyond GDP: a long road to travel, but one that is worthy to go.

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The Social Progress Index (SPI), however, has a different approach.

The SPI differentiates itself from other challengers to GDP by its unique conceptual choice to stay away from economic data. Instead, it measures social progress via 52 concrete outcomes assessing three key indicators to measure progress: basic human needs, ‘foundations of well-being’, and opportunity (see more in this TEDx talk).

These concepts are assessed via a series of questions asking about people’s experiences in many aspects that matter for quality of life:

How many people have shelter and sufficient water?

Do people live in a sustainable ecosystem?

How many people experience discrimination?

Survey data allow to compare such outcomes based on what people feel, rather than by measuring social issues via public expenditure or laws.

 

Source: data from Social Progress Imperative, available here.

About Dr. Ev D'aMigo; PhD

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