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Explore the Stiglitz-Sen-Fitoussi Commission's call to refocus national statistical systems on measuring well-being and sustainability alongside economic production to bridge the gap between perception and reality. Learn how income, wealth, distribution, and household perspectives play crucial roles in shaping a more inclusive and accurate representation of national prosperity.
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13th OECD – NBS Workshop on National Accounts,November 2009Stiglitz-Sen-Fitoussi Commission Paul Schreyer OECD Statistics Directorate
“Many people looked at US GDP growth in the 2000s and said: ‘How fast you are growing – we must imitate you.’ But it was not sustainable or equitable growth. Even before the crash, most people were worse off than they were in 2000. It was a decade of decline for most Americans.” Joe Stiglitz Financial Times 27 January 2009
Main features • Commission put in place Feb 2008, report presented Sep 2009 • Main thrust: statistical systems need to re-focus from measuring market production to measuring people’s well-being, and sustainability • Why important? Issue for credibility of statistical system, quality of political debates and democracy • Address discrepancy between perception and official data • What we measure affects what we do
Main features • Arguing for such shift does not imply minimising either the significance of the NA (“one of the major inventions of the last century”) or the importance of improving existing measures of economic production (e.g. quality changes), but recognising: • a “tension” within the NA between a production- and welfare-focus that has always been there but is more evident today than in the past • a “political demand” for going beyond-GDP that was not there in the past and that combines with a ‘grass-root’ demand by citizens and civil society
Main features • Report covers a broad field under headings of: • Classical GDP issues – material living standards ii) Quality of life; iii) Inter-temporal aspects (sustainability).
Improve measures of material living standards (‘Classical GDP Issues’) • Needed: statistical measures that bear a closer relation with people’s experiences • Such measures are already available inside the NA or can be developed consistent with the NA • NA ≠ GDP! • 5 messages
Message #1: look atincomeratherthan production • At current prices: Income = production • But real income ≠volume of production • Volume = the ‘quanity’ of goods and services coming out of the national ‘factory door’ • ‘Real’ income = how much goods and services (some of them produced abroad) can I purchase with the income generated in the factory?
Net ratherthangross…and accounting for international incomeflows • Real net income instead of volume GDP • Net income accounts for depreciation • People receive income and transfer payments from abroad and they also send them abroad • Important issue in developing countries when eg incomes are re-patriated by foreign investors: value of production may go up but national disposable income may decline
Message #2: income and wealth come together • How well off people are is more an issue of wealth than of income • But wealth is actually not very well measured • More needs to be done to have balance sheets of financial and non-financial assets of households, firms and the government • Problem: valuation of assets
Message #2: income and wealth come together • Measures of capital are also the main ingredient to track sustainability • Sustainability = capacity to go on with current patterns of consumption and production without jeopardising stocks of physical, environmental and human capital • Some of these stocks are not part of assets recognised national accounts assets • But wealth measures can be constructed following NA principles satellite accounts
Message #3: emphasize the household perspective • A average HH income can move very differently from GDP • Examples: Italy, Japan, Korea, Poland, Slovakia, Germany as next graph shows
…betterthandisposableincomeisadjusteddisposableincome • Adjusted disposable income corrects for (mainly) health and education services that households receive from government • Otherwise biased comparison between countries and/or over time • A look at France
‘Individual’ services provided by government in France in 2007 (€290 bn, ≈20% of HH disposableincome)
…but these services have to bewellmeasured • Traditionally, outputs=inputs • Not necessarily true • Measurement is tricky but possible • Helpful: new administrative sources, for example for health • Conclusion: let us make real adjusted disposal household income one of the headline figures
Message #4: more prominence to distributional information • Individuals cannot identify themselves with averages if distribution is very skewed • Introduce indicators such as median income alongside mean income • Problem: income measures for micro data ≠ income measures for national accounts data • But comparisons can be made
Message #5: thereis more economicactivitythanmeets the (statistical) eye • No recognition of the production activity of services by households (typically provided by women) • Childcare, cooking, washing, care of the elderly • All this constitutes productive activity and implicit income • Putting a monetary value to housework is difficult but can be done for research purposes • Changes the picture of real income growth over time (typically downwards) • Changes the picture of comparisons of real income levels across countries
From material living standards to quality of life • Economic resources are not all that matters for human well-being: many of the determinants of human well-being are not resources but aspects of people’s life (“doings and beings”); • Measurement of both objective and subjective dimensionsis important • Subjective measures, covering evaluations, feelings, affects ; they provide critical information about well-being and its determinants – often uncorrelated to measures of material well-being
From material living standards to quality of life • Objective measures: health, education, personal activities, political voice, social connections, environmental conditions, (in)security • Task: developing indicators for these areas or bringing existing information together • Big agenda: measuring inequalities in these conditions (e.g. health) and assessing how these conditions relate to each other and to income
Pragmatic approach to inter-temporal aspects of sustainability • Beyond current well-being (i.e. monetary resources and non-monetary dimensions of QoL) it is key to see whether current levels of well-being can last over time • Measuring sustainability moves us from data to modelling of future interactions • Indicators of sustainability should correspond to changes in some underlying “stock” relevant for well-being (man-made, natural human and social capital)
Pragmatic approach to inter-temporal aspects of sustainability • Monetary valuation of stocks promising mainly for economic aspects (produced assets, human capital); for other types of capital (environmental capital, social capital) monetary index difficult • Because of this difficulty, measuring environmental sustainability require physical indicators
How was the report received? • President Sarkozy: France will put this report on the agenda of all international meetings and discussions that have for objective the creation of a new economic order • French Minister of Finances: mandated INSEE and the OECD for concrete follow-up • Report played important role in the 3rd OECD World Forum on Statistics, Knowledge and Policy (Busan Korea) • Report fits perfectly into the Global Project on Measuring the Progress of Societies that is hosted by the OECD • OECD Road map prepared for follow-up work
