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OECD Work on Measuring Well-Being and Progress

ABS

Canberra 14 September 2010

Martine Durand

OECD Chief Statistician

Director of Statistics

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Outline of presentation

1.The “measuring progress” agenda and the OECD-hosted Global Project

2.New direction for OECD work on measuring progress

3.Implementation issues

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1. The Measuring Progress Agenda and the Global Project

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Context

Growing gap between the image provided by official statistics and people’s perceptions of their own conditions

Damaging for the credibility of official statistics, and ultimately public policies and the functioning of democratic processes

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Higher tides did not lift all boats: income inequality widened in ¾ of OECD countries

between 1985 and 2005

Source: Growing Unequal?, OECD 2008

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People in richer countries are not necessarily more satisfied with their life

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NNI per capita (left-axis) Subjective well-being (right-axis)

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Beyond GDP :Focus on households’ and individuals’ well-being

GDP is not a good measure of well-being because:

It includes economic activities that either reduce well-being or that remedy the costs of economic growth

It does not include all economic resources (own-use household services)

It excludes many of the dimensions that matter for well-being (health, inequalities, education, quality of work, leisure, social ties, good institutions, etc.)

It does not inform on whether well-being can last over time (stocks of natural, human and social capital)

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The OECD-hosted Global Project

OECD started to address these concerns about 7 years ago and launched in 2007 the Global Project in partnership with other organisations

Main objective:

– To stimulate national and international debates on societal progress and its measurement; 3 World Forums: Palermo (2004), Istanbul (2007), Busan (2009)

– To create a network of networks for advocacy and for sharing of information on progress

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This agenda has received strong political support

President Sarkozy set up the Stiglitz-Sen-Fitoussi Commission (September 2009)

EU Communication on “GDP and beyond” (September 2009) G20 Leaders statement in Pittsburgh and Toronto to “encourage

work on measurement methods so as to better take into account the social and environmental dimensions of economic development” (November 2009, June 2010)

EU 2020 Agenda (from creating “the most competitive and dynamic knowledge-based economy in the world” to “turn(ing) the EU into a smart, sustainable and inclusive economy” with emphasis on “jobs and better lives”)

Conclusions of OECD Ministerial Council (May 2010)

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OECD WORK ONMEASURING PROGRESS

… and a strong academic foundation

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2. New Direction for OECD Work on Measuring Progress

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From advocacy and networking to development of indicators

Streamlining OECD activities contributing to the Global Project

Focusing work on the development of indicators – Involving and working more closely with NSOs through CSTAT

– Collaborating with European initiatives, e.g. Eurostat/INSEE Sponsorship; French G20 Presidency

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Streamlining OECD activities contributing to the Global Project on Measuring Progress of Societies

– Organisation of 4th OECD World Forum in India in 2012 with a strong focus on measurement

– Other regional events (Latin-America, Asia, Africa, MENA), leading to India

– Development of Wikiprogress: a platform for the sharing of information and statistics

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Focusing OECD work on the development of indicators under the auspices of CSTAT

A. Disseminating existing relevant OECD measures

B. Defining, and contributing to, the research agenda

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National Accounts measures other than GDP, focusing on households (e.g. household income and consumption, assets and liabilities )

Beyond economic statistics, OECD data already cover many dimensions of quality of life (environmental, health, social, education, governance)

Other possible “low-hanging fruits” (e.g. from time-use surveys)

All available information will be brought together in a specific OECD publication (“How’s Life”), to be released for the OECD 50th Anniversary next year.

A. Disseminating existing measures

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Economic resources: – Integrating within the National Accounts information on the

distribution of household income and wealth from survey and administrative sources

– Analysing at the micro level the joint distribution of household income, consumption and wealth

– Developing measures of household production of non-market services.

– Decomposition analysis of the differences between growth in GDP and in household disposable income.

B. Contributing to the research agenda

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Quality of life:

– Developing guidelines for NSOs on how to measure different aspects of subjective well-being (evaluations and feelings).

– Measuring vulnerability and insecurity: going beyond income-poverty, to look at risks facing people with few assets (financial, human capital, social connections)

– Indicators of environmental quality of life: how environmental conditions affect subjective well-being; people’s appreciation of the quality of their local environment – air, water, green space.

B. Contributing to the research agenda

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Sustainability:

– measures of human capital based on discounted income

– physical measures of stocks and flows of natural resources and resource productivity

– measures of intangible assets

B. Contributing to the research agenda

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3. Implementation Issues

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OECD institutional process

Research agenda approved by CSTAT at its June 2010 meeting

Strongly supported by OECD Secretary-General– One of his six priorities for 2011-12– Strong financial support

Work programme involving several Directorates and Policy Committees:

– To develop new indicators in their areas– To link these indicators with policies

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Planned contributions from other OECD Directorates and Policy Committees

– DELSA: better measures of people’s morbidity, vulnerability to extreme poverty

– ENV: measures of impact of environmental conditions on people’s quality of life

– ECO: measures of non-market production into Going for Growth; work on inequalities and trade-offs

– EDU: measures on economic and social outcomes of learning– GOV: indicators on quality of democratic institutions; inequalities across

regions– DEV: indicators of social cohesion and exclusion in emerging and

developing countries

(Preliminary and non-exhaustive list)

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Work on progress measurement expected to contribute to other OECD “Horizontal

Projects” Green Growth Strategy to be delivered in May 2011

– Environmental Accounts– Extended Growth Accounting approach– Environmental Quality of Life

News Sources of Growth (Innovation)– Human Capital– Stocks of Intangible Assets

Gender22

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Linking indicators to policies

The virtuous policy cycle

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Key implementation challenges Choice of indicators

– Dimensions of progress and number of indicators to follow over time– Operationnable for policy?

Involvement of NSOs is key to ensure feasibility, quality and trust – Use of non-official data– Modification of existing surveys (e.g. timeliness of TUS; new questions in

households surveys, etc..) How to involve non-OECD G20 and developing countries?

– Partnership with World Bank, Paris 21 OECD to make the bridge between various initiatives, notably at

European and G20 level– Eurostat– G20 Framework for Strong, Balanced and Sustainable Growth

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Conclusions The “progress agenda” is set to remain a very prominent

OECD activity in the future : one of the OECD Secretary-General’s six priorities for 2011-12

OECD work will focus on this issue through: i. dissemination of existing indicators

ii. research on new measures of well-being and sustainability

iii. Limited number of regional events and 4th World Forum in India

iv. Development of wikiprogress

Success ultimately hinges on member countries willingness to support this work and invest in its development, both domestically and internationally: at OECD key role for CSTAT

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Thank you for your attention!

Martine Durand (martine.durand@oecd.org)