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Broader Measures of Progress

J. Steven Landefeld, Director

“Response to the Rio+20 Mandate for Broader Measures of Progress”

High Level Forum Event for the UN Statistical Commission MeetingFebruary 25th, 2013

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Broader Measures of Economic Progress?

▪ Recent Impetus for Broader Measures: Rio +20 Housing and financial crisis Great recession and slow recovery Fiscal crisis Increasing concentration of income Stiglitz report

▪ How Broad? “National accounts should include elements that reflect

economic welfare that can be brought directly or indirectly into relation with the measuring rod of money” –Pigou

He emphasized that can might mean anything from can easily to can with violent straining.

▪ Progress on broader measures have waited too long (over 75 years!)▪ We need to set ambitious, but achievable goals

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Broader Measures of Economic Progress?

▪ Long-Standing List to Choose From: Energy and Natural Resource Accounts Environmental Accounts Distribution of Income, Consumption, and Wealth Alternative Measures of Sustainability Medical Care and Health Accounts Education Real Government Output Household Production

▪ Choices will depend on country priorities and resources, but some degree of standardization and comparability (SNA/SEEA, etc.) important

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Broader Measures of Economic Progress?

▪ Challenges include: Gaps in data Lack of consensus on estimating methods Fiscal crisis Economic crisis This stuff is really important with large economic

and political implications ▪ Big Bang or Incremental Approach?

Current environment may suggest incremental approach with extensions in key areas (w/double bang for the buck)

What are some of these areas?

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Growing or Shrinking Living Standards?

5Source: BEA, Census

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Growing but Slower

Source: BEA, Census

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Alternative Measures of the Purchasing Power of Households

7Source: BEA

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How Did We “Miss” the Housing Bubble?

Source: BEA, Federal Reserve Board, Standard & Poor’s

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How Did We “Miss” the Stock Price Bubble?

Source: BEA, Standard & Poor’s

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Where’s the Debt?

Total liabilities/total financial assets

Source: BEA

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Investing For the Future of Just Keeping Up?

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Source: BEA

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Human Capital

Source: BEA, Christian (2012)

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What is the Value of Household Work?

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Feeling Rich on Capital Gains

Source: BEA, Federal Reserve Board

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Long-Term Happiness and Real GDP

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Source: BEA, University of Michigan, Veenhoven, R., World Database of Happiness, Distributional Findings in Nations

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Happiness & the Financial Crisis

Gallup Well-being Index

Unemployment rate

Source: BEA, Gallup