Stiglitz Commission GDP and beyond Robin Lynch National Accounts in Practice – Advanced course Luxembourg, 2-11 October 2017 THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

Stiglitz Commission report Commissioned in 2008 by President of France chaired by economists and Nobel prize winners Stiglitz (USA) and Sen (UK, then USA) Reported in 2009

Stiglitz Commission report Why? GDP seen as an accurate measure of economic growth, but . . . Seen as a limited measure of income distribution and other “well-being” measures such as quality of life, environment sustainability etc.

Aims of Stiglitz Commission Identify the limits of GDP A) current measurement problems B) additional information to cover social progress measures C) feasibility of alternative measurements D) How best to present the information

Stiglitz Commission report Statistics are the information used to develop government policies to promote economic and social progress Should current concepts be refined? Should the scope of economic statistical measures be widened?

Stiglitz Commission report Who is the report for? Politicians Policy makers and analysts Academics, statisticians – users and suppliers The public for better understanding of the issues (and so the media as popular presenters)

Stiglitz report - main messages Current national accounts measures Prices must reflect quality changes in deriving volume estimates of growth Measure government “output” better – current methods do not allow productivity analysis More focus on income & distributional measures

Stiglitz report - main messages Shift emphasis from measuring economic output to people’s well-being There is an increasing gap between measures of economic production and individual sustainable well-being The statistical system should include measures of well-being and sustainability (environment degradation) that complement GDP measures

Stiglitz report - recommendations Well-being is better caught in income and consumption measures, rather than production 2) Emphasise household view 3) Consider income and consumption jointly with measures of wealth 4) More emphasis on the distribution of income, consumption and wealth

Stiglitz report - recommendations 5) Broaden income measures to non-market activities 6) Improve quality of life data (health, education, democracy, etc.) 7) Quality of life measures must reflect inequalities in society

Stiglitz report - recommendations 8) Conduct more surveys into links between quality of life topics, to assist policy analysis 9) Statistical Offices should develop quality of life indices, incorporating different aspects 10) Statistical offices should survey subjective as well as objective views of society (are you as happy as last week?)

Stiglitz report - recommendations 11) Sustainability can be measured through a “dashboard” of appropriate indicators (avoids weighting and model issues) 12) Sustainability measurement needs more official indicators in physical units covering environmental damage. Pragmatic and not too much modelling and assumptions

What next? Discussion and research encouraged and continued National and international agencies must decide what should be followed up, and how much should be invested

Happiness measures

how satisfied are you with your life nowadays? to what extent do you feel the things you do in your life are worthwhile? how happy did you feel yesterday? how anxious did you feel yesterday? People are asked to respond on a scale of 0 to 10, where 0 is “not at all” and 10 is “completely”.

Outcomes Countries are measuring happiness and environmental sustainability No great impact on policy yet