Friday, 11 April 2014

We are already in a Beyond-GDP world, but we need a compass

This blog, written by Donato Speroni, provides some highlights from the final conference of the BRAINPOoL project which prove useful for moving beyond GDP. The post is based on an article published on and is part of the Wikiprogress Series on Data and Statistics.
Being a journalist and blogger about statistics and politics, I have been following the “Beyond GDP” (B-GDP) research since the 1st OECD Forum on “Statistics, Knowledge and policy” in Palermo in 2004. We all know that the need to find new ways for measuring progress was outlined almost 50 years ago by Robert Kennedy and that the research became a global effort from 2009, after the publication of the Stiglitz Report. The economic crisis dramatized the need for new parameters, because it changed the values contributing to an acceptable well-being, while sustainability is also becoming a growing concern.

Everywhere new statistics were provided, dashboards and composite indicators were tested, but the real problem was the limited use of these experiences by decision makers, especially at national level. The whole “measuring progress initiative” was risking to run aground, to remain a stimulating intellectual exercise with no impact on the real word.

In this framework, the final conference of the BRAINPOoL project on March 24 in Paris set a turning point. BRAINPOoL means “bringing alternative indicators into policy”, and the European Commission finances the project. The Paris meeting included two panel discussions, the first hosted personalities who had governmental or political responsibilities (Enrico Giovannini, Helen Goodman, Chantal Jouanno and Mikael Jungner), the second hosted economists and civil service directors from different countries (Jan Verschooten, Gus O’Donnell, Andrew Dean, Volker Schmitt, Wanda Gaj, Stefan Kooths), under the Chair of Martin Durand, OECD chief statistician. 

Here are some outputs that I found particularly interesting and stimulating:
  • Testimonials who held effective political and administrative power confirm that the adoption of B-GDP indicators might really change the priorities of political action. For example, labour market policy might be different if explicitly driven by the aim of maximising well-being. Today’s politicians mainly look at employment and unemployment rates. The use of alternative indicators would show greater importance for a work-life balance, quality working conditions and job security.
  • Inequalities impair the adoption of alternative indicators. The have-nots, who should benefit more from the B-GDP policies, cannot afford a trade-off between actual economic benefits, however limited, and future improvements of the social or environmental context. Talking about alternative indicators does not win votes.
  • In order to go beyond these difficulties, we need a “new narrative”. The alternative indicators should be presented in an effective and understandable way, putting the accent on the risks that we are taking if we stick to the traditional political targets. Data like GDP or unemployment are important, but place the attention on the short-term goals of political action. B-GDP indicators envision problems and collective interventions that might have an influence on the quality of life after five years or more, well beyond the electoral cycle. This contrast is evident if we take into consideration the environmental changes or the deterioration of the human and social capital of a community. A new narrative must be capable of arousing interest and engagement in the media, in public opinion and hence in political leaders, presenting the future effects of these current unsolved problems. Without this narrative, the short-term problems to be dealt with before the next elections will always prevail.
  • We need social and environmental data just as timely as the economic data. Almost all the social data comes out yearly, while the economic figures come out quarterly or monthly. Instead, “we want to know in real time how many people are alone at Xmas” as was said in Paris. Polls are not enough; we need reliable information, based on adequate investments in social statistics. In the UK, Margaret Thatcher decided to cut the social surveys because she did not want too many figures about poverty while she was implementing free market policies. Now (I think) we still need policies based on the free market (for instance, cuts in public spending), but we also want to know as soon as possible the social consequences in order to manage timely interventions.
  • In any case, the ideological quarrel about GDP should be scrapped. Tax revenues, public deficits and European policies aimed at reducing the sovereign debts all depend on the trends of the domestic product. GDP determines the dimension of public expenses and of social contributions. Therefore, it is a bad mistake (and a lost battle) to present GDP indicators and policies as a banner for “anti-market economics”.
  • The core of B-GDP is finding a way to enhance people’s satisfaction with their lives. It cannot be done without stronger policy interventions. This means having public powers which care about citizens’ relations, long life training and maybe people’s capacity to “extract happiness” from their condition. Do we really want this “invasive” public action? This is the real political issue, which requires common sense and “middle of the road” answers. We probably cannot accept ideologies in favour of knocking down State intervention with the wrong idea that the free market will “someday” overcome excessive inequalities in incomes, health or instruction. Most of us want public powers that protect the right to pursue happiness, but not many of us want a government telling its citizens “how to be happy” and “how to behave for their own good”. It’s a delicate political balance.
  • We need B-GDP models, as we have models based on GDP, but we do not know how to put the social data into these models. It would be even more difficult to include the environmental data about phenomena which cannot be priced, like biodiversity. Econometric models are not perfect and their predictions are often wrong, especially in these times of crisis, but they are employed to evaluate different alternatives in fiscal and monetary policy. National and international institutions have their own models, constantly updated. Now we would need to enlarge these systems of equations in order to obtain a “well-being forecast”, which should tell us, if new public decisions might increase or decrease collective quality of life, distances between social classes, preservation of natural or cultural resources, or even warn us of the risks of social unrest or environmental catastrophe. It’s a big challenge.

The general impression after the Paris debate was that we are already “beyond GDP”, because political decisions do not depend only on growth and other economic factors. We currently have many statistical indicators which might help in this process, much more than ten years ago, However, decision makers use them randomly, following their own convenience without any effective consensus on the choice of the data considered important in the political debate. We are in a B-GDP Europe, but we still don’t have a compass to help us find our way. This is an important topic for the next European elections and for the incoming Commission in Brussels. The BRAINPOoL process offered a lot of food for thought and needs to be continued.

In a short time, another important B-GDP project will come to a conclusion: the E–Frame project by the National statistics institutes will produce a “Handbook for the use of alternative indicators”. Italy has an important role in this process, with the leadership of E-Frame by Istat (together with Statistics Netherlands) and the new national Bes indicators for equitable and sustainable well-being. I hope that the government in Rome will give adequate attention to the B-GDP issues during the Italian semester of the European presidency starting on July 1st of this year.

- Donato Speroni
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