The release of the report by the Commission on the Measurement of Economic Performance and Social Progress led by two Nobel Laureattes Joseph Stiglitz and Amartya Sen on 14 September has stimulated discussion on whether the "growth fetish" or the "GDP fetish" as Stiglitz puts it is somewhat misplaced.
The report notes that certain aspects of national income accounting could be responsible for providing misleading signals to us in our performance oriented world. These include the non-valuation of non-market activity and household related labour, the inclusion of environmentally destructive or socially undesireable activity, the undervaluation of quality improvements in products and the focus on inputs such as government expenditure rather than the efficiency and effectiveness of such inputs in providing desireable outcomes.
One of the more notable recommendations made by the commission had to do with incorporating other indicators of social wellbeing along with GDP to provide a more well-rounded picture of progress and development given the advances in econometric techniques that make such measurement possible.
The World Values Survey has been doing this for years. Measuring country results for both GDP per capita adjusted for purchasing power and a thing called the Subjective Well Being Index, the survey results has provided an "arc of happiness" that depicts the way in which economic well being contributes to overall well being. This arc suggests that past a certain level of income, say US$10 000 per annum, economic growth provides a diminishing marginal return on human happiness.
Back to the commission: one other important observation made was that reducing social inequality should be high up on the agenda of any government. As Stiglitz notes,
The report notes that certain aspects of national income accounting could be responsible for providing misleading signals to us in our performance oriented world. These include the non-valuation of non-market activity and household related labour, the inclusion of environmentally destructive or socially undesireable activity, the undervaluation of quality improvements in products and the focus on inputs such as government expenditure rather than the efficiency and effectiveness of such inputs in providing desireable outcomes.
One of the more notable recommendations made by the commission had to do with incorporating other indicators of social wellbeing along with GDP to provide a more well-rounded picture of progress and development given the advances in econometric techniques that make such measurement possible.
The World Values Survey has been doing this for years. Measuring country results for both GDP per capita adjusted for purchasing power and a thing called the Subjective Well Being Index, the survey results has provided an "arc of happiness" that depicts the way in which economic well being contributes to overall well being. This arc suggests that past a certain level of income, say US$10 000 per annum, economic growth provides a diminishing marginal return on human happiness.
Back to the commission: one other important observation made was that reducing social inequality should be high up on the agenda of any government. As Stiglitz notes,
This means that there is increasing disparity between average (mean) income and the median income (that of the "typical" person, whose income lies in the middle of the distribution of all incomes).Dealing with income inequality could mean addressing both sides of the distribution. At the top end, the compensation of corporate executives has to be governed properly, while on the opposite end, the need to improve access to education, healthcare and jobs for the most socially disadvantaged groups must be prioritised.
fully agree the cost of resources to the poorest most margianlised people continues to increase decreasing their ability to access to those resources
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