Beyond GDP indicators: To what end?
Today’s post is by Lucas Chancel, researcher at the Institute for Sustainable Development and International Relations (IDDRI) and lecturer at L’Institut d’études politiques, Paris and Damien Demailly, programme co-ordinator at IDDRI.
When a French MP recently decided to draft a law for the adoption of Beyond GDP (BGDP) indicators in France, she was told that such a law wasn’t necessary because BGDP indicators already existed and were published annually in the country. The MP replied that nobody in Parliament or government was aware of it. The reason was simple: the new set of indicators was published in the annex of a very technical administrative report – in a place where nobody would even bother look at them. This example sheds light on an important dimension of the BGDP indicator debate: measuring and publishing indicators is not sufficient, it is essential to reflect on how they can be used practically in policy making processes.
Today, several countries have already officially adopted dashboards of BGDP indicators. These pioneers are interesting cases to look at in order to see how BGDP indicators are used in practice: are they left in technical annexes of government reports, used as communication tools or mobilised effectively in the making of public policies?
Australia set up Beyond-GDP indicators as early as 2002, developed and supported by the Australian Bureau of Statistics and its statistician in chief. The dashboard comprises 26 dimensions grouped around four headline themes: society, economy, environment and governance. The dashboard has been published frequently and holds particular interest for the media and the general public. Indicators were initially designed to help citizens consider progress in a more integrated way, and not to evaluate government actions – however, the dashboard is regularly used by political staff in their media interventions.
Belgium ratified a law, early 2014, aimed at developing indicators to complement GDP. These indicators are currently being developed by the Belgian Federal Planning Agency and could include some of the indicators already adopted at the regional level by Wallonia: six indicators, including GDP, on three dimensions: environment, society and the economy. Interestingly, a review of BGDP indicators progress is planned to be included in the annual report of the Banque nationale de Belgique and the indicators’ progress will be debated in parliament each year. Contrary to what was initially planned in Australia, indicators are to play a very political role in Belgium.
The United Kingdom has produced a comprehensive dashboard of Beyond-GDP indicators since 2011 under a national programme for measuring well-being which was supported by Prime Minister David Cameron. The dashboard of indicators in the UK contains more than thirty indicators. Some are objective (e.g. income level) and others are subjective (e.g. percentage of anxious people in the population). The British would like to use their dashboard to measure the before and after impacts of public policies. This is not yet done systematically, but monthly reports are published to comment on how the country is performing on different dimensions of well-being and some indicators have been used to inform decision-making.
These case studies provide three interesting lessons.
First, in terms of methodology, it stands out clearly that “replacing” GDP is not an option any more in the countries which adopted new indicators. The choice that was made was to complement GDP rather than replace it. This choice can be understood by the fact that it is difficult to simply get rid of an indicator as emblematic as GDP but also because, despite its many limitations, GDP retains several powerful features (i.e. standardisation, part of a wide system of national accounts, etc.). In addition, GDP is not complemented with a single indicator but a dashboard of indicators – seen as a better way to represent different dimensions of well-being which cannot be merged into one single metric.
Second, initiatives to complement GDP were supported at the highest level. The executive power supported the Well Being Programme in the UK, the legislative power in Belgium and the administrative in Australia. In addition, indicators are not supported by one political party or sensibility: all sides of the political spectrum support beyond-GDP indicators. In the UK, it is the Conservative government, in Belgium, the Greens-Socialist majority. However, all political parties do not support similar sets of indicators. It may be anecdotic, but the UK does not have an objective measure of income inequality in its dense dashboard of indicators, while Belgium will very likely have one.
Finally, these examples showed three possible types of use of indicators. They can play a symbolic role, as initially planned in Australia: the indicators are supposed to represent progress in a different way but are not developed to measure government’s performance. Indicators can also play a political role, like in Belgium where they are developed precisely to assess government’s performance via an annual debate in Parliament. And new indicators can also be developed in order to play an instrumental role: when they are used to measure the impacts of specific public policies. Clearly, BGDP indicators are rarely used in this way currently, partly because of a lack of statistics and theory to understand how they are impacted by different types of public policies.
However, it should be reminded that, just like BGDP indicators, GDP did not always exist and has not always been used in an instrumental way. It took several years and decades, with developments in economic theory and statistical methods, as well changing socio-economic expectations, to make of GDP a symbolic, political and instrumental indicator. BGDP indicators are following this path even though it will undeniably take time and – indeed- political will.