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Saamah Abdallah is a researcher at nef’s Centre for Well-being.
President Sarkozy: an unlikely revolutionary
Although you wouldn’t have known it from the media coverage at the time, President Sarkozy did something far more remarkable in January 2008 than get engaged to the singer and model Carla Bruni. While angry French leftists were burning Bruni’s CDs on public bonfires, her new fiancé announced his intention to challenge our most intractable economic orthodoxy: Gross Domestic Product.
Soon enough, the President had set up an impressive commission of Nobel Prize-winning economists and social scientists to address the question of how to move beyond GDP as a measure of economic performance and social progress. The group was to be led by former chief economist at the World Bank, Joseph Stiglitz, and would include development guru Amartya Sen, psychologist Daniel Kahneman and the economist-turned-climate-change-hero Lord Stern.
A year and a half on and the Commission has published its final report. The vision is bold – it recognises that “new political narratives are necessary to identify where our societies should go” and advocates “a shift of emphasis from a ‘production-oriented’ measurement system to one focused on the well-being of current and future generations”. Specifically, it recommends that governments should measure subjective well-being – people’s experience of their quality of life – and recognises that these should be textured and multi-dimensional.
These calls are admirable, and echo what nef has long been calling for, particularly in our National Accounts of Well-being report from January 2009.
But there’s a problem. The report carries many recommendations, and there’s a risk that politicians will latch onto the easier ones, without really taking home the big message: namely, that we need to radically shake up our understanding of progress and success. For example, the report shies away from suggesting an overall measure of progress, such as nef’s Happy Planet Index, leading to the risk that GDP will remain unchallenged as the de facto indicator of overall success, despite it never being intended that way.
But for now the Commission, and indeed, dare we say it, Sarkozy, deserve plenty of praise for their boldness. Let’s see if he and other politicians put into practice the advice they are given by the world’s best economists: to move beyond GDP and measure well-being.
nef’s Happy Planet Index is featured in this week’s New Scientist magazine as one of many radical ideas for a better world.
Saamah Abdallah is a researcher at nef’s Centre for Well-being.
The Palazzo Strozzi in Florence was once home to a Renaissance banking dynasty. But last week it provided a setting for a conversation about how we can re-define progress beyond simply measuring national product.
International meetings of statisticians are hardly the most likely place for one to find passion and drama. Yet, in the Palazzo Strozzi in Florence, home to one of the major banking families of the 13th century, Juliet Michaelson and I took part in a debate which could be changing how we measure progress.
When nef started advocating subjective measures of well-being – i.e. asking people how they feel their life is going – as a tool to guide policy, we were entering almost virgin territory. But it seems that the world of government statistics has started to catch up with projects such as our Happy Planet Index. Subjective well-being is part of official statistics in several countries including New Zealand, Canada and even the UK. nef is currently advising Eurostat, the EU’s official statistics body on the feasibility of including well-being indicators in their official sets. And the OECD is the unlikely home of a major Global Project on Measuring the Progress of Societies, championed until now by the organisation’s Chief Statistician, Enrico Giovannini.
It was the OECD that arranged the meeting aimed to encourage chief national statisticians to take subjective well-being measurement seriously. Chief statisticians and presidents from the statistics offices of the USA, Canada, Ireland, Spain and many other countries were present. The meeting was timed to follow on the heels of the ninth annual conference of the International Society for Quality of Life Studies (ISQOLS), ensuring many of the leading academics working on subjective well-being were also present.
The meeting showed that there was still work to be done. Many statisticians recognise that measuring subjective well-being is a central part of informing governments how well they are doing. They also see the benefits that subjective data provide in terms of understanding other areas. For example, well-being data can tell you something about the impacts of high or low social capital in an area. Academics such as Prof. John Heliwell at the University of British Columbia in Canada made a plea for statisticians to include a few subjective well-being questions in as many different surveys as possible. Meanwhile nef, alongside Prof. Felicia Huppert at the University of Cambridge, called for more textured measures of well-being, such as the National Accounts of Well-Being, so as to provide policy makers with a better understanding of the ways in which the nation’s population is doing well or not so well.
Some statisticians, howeever, were still very resistant to the idea of taking up precious ‘real estate’ on their surveys with questions about how people feel. They argue that they measure what they are told to, and that they are not being told to measure well-being. As Dr. Munir Sheikh, Chief Statistician of Statistics Canada put it, “It’s not my job to decide which data is more important. It’s the users.” Other statisticians disagreed, highlighting that statistics offices do have some flexibility to pre-empt data requests. Meanwhile, the academics argued that there is a chicken-and-egg situation: government bodies will not ask for well-being data until statistics offices collect it, and vice versa.
But, perhaps, for the sake of statisticians such as Dr. Sheikh, it is important that we make it clear that well-being is important. A recent UK poll found that 81% of people supported the idea that the Government’s prime objective should be the ‘greatest happiness’ rather than the ‘greatest wealth’. Given that’s the case, and given that statistics offices are public bodies whose duty it is to provide information to citizens on how our Government is faring, perhaps we all need to tell them just how much we’d like to know the state of well-being in our countries.
Sam Thompson is a researcher and a consultant at nef’s centre for well-being.
Much of the happiness and well-being research that you read about is based on answers to very simple self-report questions: How satisfied are you with your life overall? How happy have you been recently? How often have you felt miserable in the last two weeks? and so on.
Reliance on these kinds of measures has sometimes led to criticism. But there has always been plenty of evidence that even such apparently simplistic self-report questions can be potent indicators of physical and psychological well-being. A striking example is this new study, which tracked older adults over a five year period.
Those with self-reported depression [rating of agreement with the statement: "I felt depressed"] had a 5-year mortality of 30.2% versus 19.7% in those without self-reported depression [...] . This association persisted after adjustment for age, sex, education, functional status, and cognition
Subjective indicators will never tell the whole story and, as we set-out at some length in our National Accounts of Well-being, policy makers need to use multiple measures to truly understand how people feel and function in their lives and so make better decisions. But every now and again it’s nice to reconfirm that self-reported measures of well-being really do map-on to “hard” outcomes, and in a useful way.
Juliet Michaelson is a researcher at nef’s centre for well-being.
In making the case for the regular collection of national level statistics on population well-being, our National Accounts of Well-being report highlighted the interesting model provided by the Gallup-Healthways Well-being Index. This is a survey which since January 2008 has conducted 1000 interviews almost every day of the year across the United States to produce detailed well-being data on a daily basis. As a privately-sponsored survey, the full dataset is not publicly available, but a new website allows the data collected in 2008 to be explored at state- and congressional district-level .
The approach to conceptualising and measuring well-being is somewhat different to our own: while our National Accounts of Well-being were based on seven key components of personal and social well-being, the Gallup-Healthways Well-being Index is built up of six domains of well-being. There are some similarities, with two of the Gallup-Healthways domains being built on measures of emotional health and evaluations of life as a whole, mirroring our emotional well-being and satisfying life components. But, in part reflecting the healthcare industry sponsorship of the survey, the domains also expand beyond subjective well-being to measure physical health, healthy behaviour, work environment and basic needs and services. It’s a useful point of comparison to our National Accounts of Well-being, and will help frame the debate about exactly which elements of population well-being it is most useful to systematically measure. It also demonstrates the growing recognition, in the private sector as well as in government and policy circles, of the value of rigorously collected population well-being statistics.
Stewart Wallis is nef’s Executive Director.
Although it might be called a ’summit’, the World Economic Forum doesn’t take place up a mountain but in a deep valley. Views are limited to the valley walls, making it difficult to survey the wider landscape. Take the cable car 1,000 metres up to a real summit and the picture changes dramatically. Mountains and valleys stretch in all directions as far as the eye can see. The whole becomes clear.
It turns out that the Forum’s location is well-suited to the kinds of discussions that go on here. Few people seem to comprehend the big picture, to see beyond what is near and familiar. Fewer still understand the changes that are now needed.
That said, the prevailing mood is noticeably different to the last time I was in Davos three years ago. This year, the self-satisfaction is gone and everything is decidedly sombre. People are clearly prepared to listen to ideas that would have been dismissed out of hand even a short time ago. For me, the key question was posed by Jim Wallis, Founding Editor-in-Chief of Sojourners: “Will we let this crisis change us? To do so requires repentance and real understanding. Only if fundamental change occurs, will the crisis have any redeeming features.” I saw the outward signs of contrition, but repentance and real understanding were limited to the few.
Listening to the bankers and financiers was instructive. Some were courageous enough to admit that they got it completely wrong, but too often I heard lectures about the dangers of over-regulation and the need for preserving self-regulation. What planet do these people live on? The regulators were more reassuring. It is clear that a sea change is coming. As Adair Turner put it, ‘If it looks like a bank and quacks like a bank, we will regulate it like a bank.’ John Gieve, Deputy Governor of the Bank of England, assured me that counter-cyclical capital rules are a certainty. The causes of the depth of the financial crash seemed very clear – a total failure of regulation at all levels combined with flawed mathematical risk models and incentive schemes run out of control. The most plausible explanation I heard, though, was that too many people had been ‘bought-off’ in one way or another by the scale of the money being made to risk of questioning the source of this ‘gold.’
Some of the most interesting discussions I was involved in were around values. I moderated a private dinner of the world’s religious leaders who were clear about the need for a fundamental value shift in our economic system. There were also numerous calls for a move from shareholder capitalism to stakeholder capitalism (strictly speaking, if fully realised, this would cease to be capitalism) and a lot of interest in nef’s ideas about how doing business and doing good can be much more closely aligned.
nef’s National Accounts of Well-being attracted much attention with plaudits from, amongst others, Daniel Kahneman, the Nobel Economics Laureate. There was a sense that the time for these new measures has finally come. There was also real interest in new metrics covering well-being and sustainability from a number of companies.
On climate change, the scientists and academics were largely in agreement but many of the proposed solutions are still too technical and top-down. There were gasps when I suggested that to make clean technology viable we need a carbon price of at least $140 a tonne within the next five years – the man from British Airways told me it would ground its fleet – but I received strong support from David King, the former chief Scientific Advisor to the UK Government.
One of the few proposals that recognises the inter-linked nature of the challenges we face is the Green New Deal, published by nef on behalf of the Green New Deal Group in the summer. The term is now in wide use and most stimulus packages being planned will use some variation of the phrase, and its thinking. Yet nothing world leaders have proposed to date goes anywhere near far enough in bringing about the complete environmental transformation of our economies we need to prepare us for a low carbon future. Everybody understands the implications of recession, some see the magnitude of the climate challenge, but many seem lulled by low oil prices into a false sense of security on energy supply. Without seizing the current opportunity to both insulate against the worst impacts of recession and lay the foundations for our future energy infrastructure through a Green New Deal, we will, in a few years’ time, I believe, face not only runaway climate change, but oil prices of $300-400 a barrel triggering a depression that would make the current crisis look like a picnic.
One obvious, immediate solution would be giving annual vouchers of, say, £1,000 per household, to invest in insulation, renewable energy and other green products and services. Once people have been lifted out of fuel poverty and our fledgling renewables industries brought to scale, a whole range of other mechanisms – such as green taxation – become viable. Once the policy had taken root, the increase in national debt could then be recovered by massive increases in the carbon price and fossil fuel energy taxes. This would be a precursor to a path to a low material throughput economy. According to Joseph Stiglitz, this will mean an economy based on saving material resources, rather than one based on saving labour.
The path is clear, but sadly there are few signs that many of our politicians have the vision to take it. If Obama can match the promising rhetoric of his campaign with the right kind of response, then he could easily take the lead on these issues: it was encouraging to hear that Al Gore believes Obama understands the scale of the climate challenge. In the meantime, it falls to those of us on the outside to push on up the mountain path, in search of that wider perspective. If we do that, then we might just rise from the ashes of these current crises, and start building an economic system which works for the well-being of people and planet.
Juliet Michaelson is a researcher at nef’s centre for well-being.
A letter to the Financial Times, 30 January 2009.
Sir, As John Thornhill notes (“A measure remodelled”, January 28), those such as Simon Kuznets who developed the modern measure of gross domestic product were explicit that it should not be used as an indicator of social progress. More than 60 years on, in a classic example of mission creep, GDP remains the de facto measure of national success and is used as the standard against which virtually all macro-level policy decisions are judged. The consequences of this obsession with economic growth are clear: a financial system disconnected from the real economy, unsustainable levels of debt and intolerable strain placed on the planet by our high-consuming lifestyles.
The new economics foundation has long called for governments to establish national accounts of subjective well-being – systematic measures of how people think and feel about their lives. In a report launched last weekend, we provided the first ever detailed proposal for how they could be structured and implemented – see www.nationalaccountsofwellbeing.org
An approach endorsed by, among others, Enrico Giovannini, the Organisation for Economic Co-operation and Development’s chief statistician, and Prof Daniel Kahneman, the economics Nobel laureate, national well-being accounts provide a direct measure of meaningful outcomes in people’s lives.
By enabling policymakers to understand the real impact of their actions on people’s experience, such accounts would reconnect government with its core purpose: improving the lot of the people it serves. It is a reconnection that must be swiftly expedited. As we enter uncharted territory it is clear that we need a better compass to guide us; National Accounts of Well-being would be a significant step in the right direction.
Juliet Michaelson
Sam Thompson
Centre for Well-being,
nef (new economics foundation),
London SE11, UK
See also: Reuters, ‘On wealth versus well-being’
Juliet Michaelson is a researcher at nef’s centre for well-being.
Today’s Financial Times includes a full page of analysis discussing the growing movement among economists and others towards producing alternative measures of economic performance and social progress. If you’ve already read our National Accounts of Well-being report , published last weekend, or looked at the accompanying website, much of the content will be familiar: the strong caution issued by Simon Kuznets, the designer of the original GDP measure, that it should not be used to infer the welfare of a nation; the perverse nature of the way GDP is calculated by mechanically counting productivity, so that spending on things like divorce proceedings is counted as a benefit; and the current work of the commission headed by Nobel-laureate economists Joseph Stiglitz and Amartya Sen to develop new measures to enable us to change “our political priorities and build happier, greener, societies”.
The article concludes by highlighting what it describes as “perhaps the most controversial issue” being examined by the commission, namely “whether to create some kind of ‘happiness index’ based on surveys of people’s attitudes”. What it doesn’t mention is that this is precisely what we have done in our work on National Accounts of Well-being. While we don’t claim that our indicators are the final word on how governments should measure people’s experiences of their lives, they certainly show how, by using high-quality survey data, robust and detailed measures of well-being are not only possible, but now a reality.
It remains to be seen what the Stiglitz-Sen commission will conclude when it reports in April. But crucially, to enable policy-makers to truly understand the impact of their actions on the reality of people’s lives, societies must start paying attention to the ways in which subjective well-being can be carefully and seriously measured. We think that our National Accounts of Well-being represent a substantial step forward along this path and our growing band of expert supporters suggests that many others are beginning to think so too.
Juliet Michaelson is a researcher at nef’s centre for well-being.
What is the best way to measure whether a country is successful? For most of the last 100 years, we have tended to assume that the answer lies in observing the growth of headline economic indicators, such as GDP. Plenty of criticisms have been levelled at GDP – it is far too narrow a measure, takes no account of the distribution of resources or environmental costs, and so on. And recent events hammer home the point that chasing ever-increasing economic growth is a fool’s errand. Even Gordon Brown, since 1997 the de-facto Chief Financial Officer of UK PLC, has had to admit that there’s no such thing as boom without the bust.
Our new report, National Accounts of Well-being: bringing real wealth onto the balance sheet, published on Saturday, provides a different response to the question. It argues that the success of nations is best measured in terms of the things that really matter to the people who live in them: their experiences, feelings and perceptions of how their lives are going. In other words, their subjective well-being. After all, as British economist Andrew Oswald noted almost 30 years ago:
“Economic performance is not intrinsically interesting…People have no innate interest in the money supply, inflation, growth, inequality, unemployment…Economic things matter only in so far as they make people happier.”
What does matter to us, and is arguably the ultimate goal of all human endeavour, is that we feel good about ourselves and the people around us, and do things in our lives which give us a sense of meaning and value.
Of course, the current economic situation is going to seriously hurt a lot of people. But in the post-crash world, we need to ask ourselves whether we want to rebuild the system according to the same flawed blueprint, or find a better compass to guide us.
The first set of National Accounts of Well-being, which nef has produced for 22 countries across Europe, are a tangible means by which governments can monitor their progress in promoting the well-being of their citizens. Using the most comprehensive international survey data on subjective well-being ever collected, we have designed a framework of measures which describe a nuanced picture of people’s experiences. For example, as well as measuring whether people have good feelings, we also look at whether they undertake activities which are meaningful, engaging and which make them feel competent and autonomous. And alongside our first headline measure of personal well-being we also measure people’s social well-being – whether they have supportive relationships and a sense of connection with others.
The results – which can be explored interactively on the website accompanying the report – show how far we still have to go when measuring success in these terms. While Denmark retains its oft-cited position with the highest well-being levels in Europe, Sweden, so often singled out to be praised for its policy success, does not feature among the top five countries on personal well-being. The UK’s performance according to the headline indicators is distinctly middling, and on the trust and belonging component of social well-being it comes a very poor 20th out of the 22 countries.
By redefining success in terms of how people actually experience their lives, National Accounts of Well-being set out a challenge for anyone interested in shaping the future of their society. But they also provide a crucial tool in efforts towards creating brighter tomorrows, in a classic illustration of one of nef’s key principles: that measuring the things which matter is a crucial step in getting them to change.
So how quick will governments be to adopt these new measures of success? Given the growing political interest in well-being we’re optimistic that it won’t take too long. In the meantime, we’ll be keeping a close eye on the reaction to our proposal, and carrying on making the case that we should be measuring what matters most…
Andy Wimbush is nef’s Communications Assistant and blogmaster.
Today is the release of our major new report National Accounts of Well-being: bringing real wealth onto the balance sheet, which comes with a brand new website: www.nationalaccountsofwellbeing.org.
If you haven’t already, I really recommend having a look. There are interactive, animated maps and charts which you can use do delve into the data. You can also measure your own personal and social well-being by answering the same survey questions which nef used for the report. There’s lots more to play with, and an opportunity to join our campaign to get National Accounts of Well-being accepted as a regular, government-led measures of well-being in the UK and beyond.
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