the Stiglitz Commissiona short presentation

Louis de Gimel, Insee

UNECE-EUROSTAT-OCDE task forcefor measuring sustainable development

Geneva 23-24 september 2009

16 janvier 2009 2

PlanThe Stiglitz Commission: Measurement ofeconomic performance and social progress

1.Measurement of sustainable devpt1.1 two main results/recommandations 1.2 Quantifying sustainability : the main stumbling

blocks Literature, appropriate prices, from theory to

practice

2. Others fields: main recommendationsII.1 GT1 classic GDP issuesII.2 GT2 quality of life, well-being: Objective and subjective dimensions

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1.1 SD : Two main results /recommendations

A clear distinction between current well-being and sustainability Sustainability has to deal with the future

See problems with a composite indicator combining the two aspects

Necessity of a sub-dashboard about sustainability

inside large dashboards.

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1.1 SD : Two main results /recommendations

A quite good convergence with the TF SD 2008 report Theoretical roots for the wealth approach Indicators interpretable as variations of “stocks” Consistent with the Brundtland definition A monetary index but only for economic aspects of sustainability (see rec 11)

Need for a separate set of well chosen (and limited) environmental physical indicators (see rec 12) Measuring the proximity to dangerous level of damage

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1.2 Quantifying Sustainability

Across the report, analysis of the main productions in the SD measurement literature (with pros and cons)-Dashboards :Useful but ...heterogeneity -Composite indices : Confusion, arbitrary weights-Adjusted GDP’s (green GDP): for what purpose ?Only current consumption without env. impoversishment-Footprints: an env. indicator and not a SD index Rather a carbon footprint than “the ecological footprint”-ANS : what is counted and with what kind of prices ?what about global goods and global nature of

sustainability?

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1.2 Quantifying Sustainability the crumbling blocks

A purpose: clarifying the debate to avoid the existing confusionWhat do we want to measure ? How should we do it under ideal conditions ? Why is it so difficult in practice ?

-Sustainability = transmitting a « sufficient » stock of resources

to next periods or next cohorts - How much is « sufficient » ? dw >0

- Summarising SD in one number: is it realistic ?

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1.2 the crumbling blocks: looking for appropriate prices

In theory, 3 steps in the « extended wealth » framework

Step 1 : Identifying the types of relevant assets ANS list and..... social capital, a larger set of environmental assets ?

Step 2 : measure net changes in stocks for each asset

Step 3 : weight them with appropriate pricesIf current asset prices do not reveal all futures preferences/

scarcitiescalculate “accounting prices” based on modelling Eco-environmental developments How thy affect well-being

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1.2 the crumbling blocks: In theory and .... in practice (1)

It works in theory see simulations in the technical report

But it needs prefect predictions

And the future is fundamentally uncertain See debates about long term env. changes: related to beliefs about future eco-env scenarios.

Possibility to use scenarios and to compile stress tests but how to quantify extreme valuations of env. assets?

 

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1.2 the crumbling blocks: In theory and .... in practice (2)

Uncertainty is also normative:What is to be sustained?

Will the future generations be more sensitive than us to env. goods

scarcity ?What kind of aggregation for the individual preferences?

The global dimension Difference between national and global sustainability when damages are unequally distributed A need for an index about global responsibility

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1.2 the crumbling blocks: In theory and .... in practice (3)

More insightsTheoretically compatibility with strong sustainability viewIf prices of critical natural assets are correctly predicted

Backyards Interest for works about human capital evaluation (appendix

2) How much does the C02 emission evaluation count for ? Distinction between sustainability and policy advice

(append3) (with cost-benefit analysis see Stern report)NB: In that case the discount rate value doesn’t change sustainability but only how much in advance it is anticipated.

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2 Other main messages of the whole Commission

Better measures of economic performance in a complex economy

Capturing quality change: a challenge Services provided by governments (collective

and individual ones) and their productivity

To shift emphasis of the measurement system

from production to people’s well-being

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2 Other main messages GT1 classic GDP issues

For well being, income and consumption rather than GDP Emphasise the household perspective In kind services provided by government An effort for reconciliation between sources

Income and consumption jointly with wealth Availability of balance sheets for countries Give more prominence to distributions (income,

wealth..): Median, Bottom and top of distributions, links Include measures of non market activitiesTime spent surveys, Accounts of household activities, amount of

leisure

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2 Other main messages GT2: Quality of life, Well being (1)

A very large program withObjective and subjective dimensions of well being Improve measures of objective conditions and capabilities

Material living standards, health, education, personal activities including work, factors shaping personal and economic security,

environnemental conditions,social connections, political voice  Inequalities in comprehensive way Across people, social groups, genders, generations Links between various quality of life domains At the individual level With dedicated surveys used when designing policies Attention to cumulative effects and disadvantaged people

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2 Other main messages GT2: Quality of life, Well being (2)

Other recommendations for statistical offices:

Provide data needed for aggregated indexes

Incorporate in surveys subjective evaluation questions

.... with objective ones and activities Capture people life’s evaluation, hedonic

experiences, priorities

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je vous remercie de votre attention

Louis de Gimel, Insee