New Ways to Measure Prosperity Beyond GDP Tanja Srebotnjak, PhD - - PowerPoint PPT Presentation

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New Ways to Measure Prosperity – Beyond GDP

Tanja Srebotnjak, PhD Ecologic Institute Berlin and Washington D.C.

GDP measures everything except what makes life worthwhile

(Robert Kennedy, University of Kansas, Lawrence, Kansas, March 18, 1968)

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Taken from a longer discussion of GDP

Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our

• streets. It counts Whitman's rifle and Speck's knife, and the television programs which

glorify violence in order to sell toys to our children. "Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of

• ur public officials. It measures neither our wit nor our courage; neither our wisdom

nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans."

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Examples for measuring well-being and prosperity

Many fields and disciplines have proposed alternative measures of well-being or prosperity with different priorities, definitions, etc.:

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Economics: ANS, NNP, NNI, GPI, Green GDP, National accounts

• f wellbeing

Sociology: PQLI, Gross National Happiness Ecology: HANPP, EVI, Ecosystem health, carrying capacity Environmental science: EF, EPI, Wellbeing of Nations, EVI Political science & Development Studies: HDI Psychology & Behavioral sciences: Subjective measures

• f wellbeing, life

satisfaction Medicine: Quality of life, DALY, QALY

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We already discussed why we should not use GDP but what are the challenges to find better solutions?

• Measurable definition, component selection, weighting, aggregation
• Data
• Consider multi-dimensionality of the concept
• Normative aspects and subjectivity
• Consider individual versus societal perspectives, current versus future generations,

monetary versus non-monetary valuation

• Dynamic change over time
• Cultural, historical and other contextual information
• Are happiness, wellbeing, prosperity etc. a zero-sum game?

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Let‘s try it out – What is important to you?

OECD Better Life Index (http://www.oecdbetterlifeindex.org/) 11 separate measures to piece together an overall impression of progress. Note: different disciplines already define these components differently.

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Housing Income Community Education Environment Governance Health Life satisfaction Safety Work-life balance Jobs Index

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Let’s make our own index

Task 1: Let’s discuss if any components are missing from the OECD’s list Add them to your print-out Task 2: Allocate 100 points to the components on your list such that more points = higher priority for your sense of well-being (don’t worry if they don’t quite add up to 100, we can re-balance the sum)

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What have we learned from this exercise?

• Priorities vary from person to person, between groups/societies and even over time
• So how to select and weigh the components? Role of value judgments about what ought

to be and what is.

• Is there a universal measure of wellbeing or prosperity?
• Does every person get the same weight in an aggregate?
• How can policy be evaluated against a moving target?
• Will pursuing optimal wellbeing or prosperity automatically be sustainable?
• How about inter-generational aspects?

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Is there a ‚single, right‘ measure?

• Most likely we will end up using several supplements to GDP and other traditional

economic benchmark indicators

• No methodology will be perfect or fit all shoes
• International or regional organisations may soon start reporting regularly on alternative

measures, which will foster their uptake by the media, policy-decisions, and citizens despite their weaknesses

• This uptake will foster debate and contribute to changing perspectives, priorities and

ultimately decisions

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Thank you

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Ecologic Institute, Berlin Pfalzburger Str. 43-44, D-10717 Berlin

• Tel. +49 (30) 86880-0

Fax +49 (30) 86880-100 berlin@ecologic.eu Ecologic Institute, Brussels: Quai au Foin 55 1000 Brussels, Belgium

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Fax +32 (2) 7324004 brussels@ecologic.eu Ecologic Institute, Vienna: Auhofstraße 4/7 1130 Vienna, Austria

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