Measuring what really counts for today’s citizen’s…and tomorrows

Dave Breuer Anew NZ & Morgan Williams PCE30 August 06

Robert Kennedy

“The gross national product (GNP) counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. Yet the GNP does not allow for the health of our children, the quality of their education, or the joy of their play. 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.”

• Context; why new measures of progress are needed

• Measuring wellbeing; genuine progress

• New Zealand’s building blocks for wellbeing indicators

Our story…

Why we need measures to complement GDP…

1. GDP counts all expenditure as a plus; food, movies, clothes the same as prisons, accidents & oil spill clean ups

2. GDP excludes functions that don’t involve monetary transaction; volunteer work, water assets, ecological services

3. GDP is a measure of today, it does not account for depletion of our natural resources over time

4. GDP masks income distribution

Life satisfaction in the UK; 1970- 1997

Average income & happiness in the US, 1957-2002

Things of personal importance to Kiwi’s

Growth & Innovation Advisory Council 2004

0 is not important and 10 is very important

100%

Quality of lifeQuality of educationQuality of natural environmentPublic health systemRace relations

Employment prospects

0

20

40

60

80

100

Strongly agree Agree Disagree Stronglydisagree

Percentage

What we value…

Q. “Economic growth & development should only occur if it does not cause lasting damage to the environment”

NZ Values Study 2005

Sustainability:where does the middle majority

stand?

• Latent support for a sustainability agenda across middle NZ• Language of achieving balance prefered to

talking about trade-offs or sacrifice• Interest around topical matters; waste, energy etc. but at a local level• People are prepared to parley their votes

on quality of life issues

Indicators are powerful…

What we measure:- reflects what we value as a society;- determines what makes it onto the policy agenda.

Is our strong focus on GDP blinding us to many attributes that are important to society but we do not measure or use adequately in our policy development?

There is a better way!

Four hundred leading economists, including Nobel Laureates, said:

“Since the GDP measures only the quantity of market activity without accounting for the social and ecological costs involved, it is both inadequate and misleading as a measure of true prosperity....New indicators of progress are urgently needed to guide our society....The Genuine Progress Index (GPI) is an important step in this direction.”

The Big Myth

• “Healthy Economy” = Healthy Society

• More Equals better.

Economics as if people mattered…

• GPI Atlantic founded 1997 to address that need: independent non-profit.

• Mandate: Create better measures of progress

• Nova Scotia pilot project for Canada, working closely with Statistics Canada

• Can provide more accurate and comprehensive measures of workplace wellness

GPIAtlantic.org

Measuring Genuine Progress…

In the Genuine Progress Index (GPI):

1 Natural resources are seen as capital assets subject to depreciation and requiring re-investment.

2 Crime, sickness, disasters and pollution clean up are counted as costs rather than contributions to well-being.

3 Voluntary work, unpaid household work, free time, health, educational attainment are valued.

Measuring Genuine Progress…

In the Genuine Progress Index (GPI):

4 Reductions in greenhouse gas emissions, pollution, crime, poverty, ecological footprint are signs of genuine progress that make the index rise. Unlike measures based on GDP, "less" is sometimes "better" in the GPI.

5 Growing equity makes the GPI go up.

•

Nova Scotia Genuine Progress Index (GPI): 22 components in 5 categories

• Natural capital• Environment• Time use• Socio economic• Social capital

Features of GPI; full cost accounting

Basic Principles and challenges:

• Expanded definition of capital: Natural, human, social, cultural, produced capital, but no common metric for measurement

• External -> internal benefits and costs

• Price non-market benefits and costs

• Fixed -> variable costs

Strengths: Enhances market efficiency, reduces needs for govt. regulation, provides more accurate, comprehensive information

GDP-GPI comparison for USA

So what are we doing in NZ?

• Quality of life in our cities; now 12 largest• Excellent MSD social reports• Marilyn Waring’s pioneering work; in assoc. with Dr. Colman• MSD 2004 report by Dr Ron Colman, GPI Atlantic, on GPI & status of indicators in NZ• Local Gov. Act 2002; LTCCP’s

Changes in social wellbeing, 1985-1987 to 2003-2005

Why GPI in New Zealand

• Enables our total wealth (natural, social, cultural, human, economic,) to be developed as a whole – to ensure our positive future in a rapidly changing world.

• Ensures our economic health is based on a sound foundation of natural, social, human and cultural wellbeing.

• Can be a key link in the global development of GPI.

Examples of GPI in development in NZ

• Wellington Region and Associated Councils have committed to developing GPI

• Massey University contracted with Mfe to develop GPI environmental indicators.

A Pathway for Going Forward in NZ

• Support Local Government using GPI, e.g. Greater Wellington, Metro Auckland, Christchurch

• Resource NZ Statistics and academic institutions to support local government work

• Take environmental GPI work presently in process and extend to social, economic, cultural arenas

• Develop international comparability model

• Establish a multi-partisan consensus on GPI

Parting quote; on economic growth and

happiness…“Modern consumer capitalism will flourish as long as what people desire outpaces what they have. It is thus vital to the reproduction of the system that individuals are constantly made to feel dissatisfied with what they have. The irony of this should not be missed: while economic growth is said to be the process whereby people’s wants are satisfied so that they become happier – and economics is defined is the study of how scarce resources are best used to maximise welfare – in reality, economic growth can be sustained only as long as people remain discontented” Hamilton 2003: In Globalism As If The World Matters, Porritt 2005

Concluding Concluding quote…quote…

“Most of the changes we must make are in our economic life. The system of taxes, subsidies, regulations and policies through which governments motivate the behaviour of individuals and corporations continues to incent unsustainable behaviours”Maurice Strong, July 24th 2002 – addressing the

US Senate Environment Treaty Implementation Review