Wednesday, 19 December 2012

Made to Measure: Why One Size Won’t Fit All

The recent OECD World Forum in Delhi showcased the plethora of approaches now underway to go beyond GDP and measure what matters.   The growth in popularity of these indicator initiatives is undeniable: the number of projects ratchets up after each world forum.  But while there has been a growth in activity, I don’t see as much growth in the maturity of the conversation about the indicators. 

Photo from Wikipedia

Far too much time is still being invested in discussions around how to measure, far too little in what to do with the measures once you get them (and what to do with the measures is the subject for a future post).  Moreover, I’m increasingly convinced that the questions around the how to measure? are much less important than we statisticians think they are.  

One type of indicator will never suit all purposes, and we’d be much better turning our minds to promoting the use of our new indicators for appropriate decision making, rather than searching for ever greater statistical perfection.

Take the debate around the merits of a composite indicator of progress (an average of other measures) versus a set of indicators for example. Few issues are likely to get a group of statisticians as hot under the collar.  

Many government statisticians feel about composite indicator much like the Taliban look on miniskirts.  They express abhorrence but are fascinated by what lies beneath.

Any composite indicator requires its component parts to be weighted together, which in turn requires judgments on the relative weights of each component. And such judgments are often difficult to make on statistical grounds alone. Now this is a genuinely important statistical issue, but I’d argue it is given way too much prominence when we consider how that composite indicator is going to be used.  Most composite indicators are not, and should never be, used directly to guide decision makers.  

If policies were set explicitly to achieve a certain value of a composite indicator for instance, we’d have to be very sure we had the weights right.  In reality composite indicators are meant to raise awareness, reframe debate and challenge a prevailing mindset. They might not be useful to design a policy, but they are great at summarizing a complicated set of data. Take the Human Development Index for example. It has never claimed to be anything other than a fairly crude measure of development. It doesn’t claim to have perfect weights, nor does it pretend to measure everything that matters.  Yet it is a practical tool that is relatively easy for all countries to produce and for users to interpret.  And it is this simplicity that has allowed it to challenge the hegemony of GDP and so help the world to realize that development is not synonymous with growth.

Likewise, those who support composite indicators do not always see the value in a set of indicators. 
How can you communicate a simple story about change with 15 or 20 indicators?” they ask.  “You can’t.” is the honest answer.  
But you can use a set of indicators to encourage decision makers to look at policy through a broader well-being lens, rather than one focused only on achieving growth. 

A well-crafted set of indicators can help promote whole of government and cross-silo decision making, and highlight the interface between the economic, social and environmental spheres, and make trade-offs and synergies more explicit.

Different approaches and different indicators are neither better nor worse than each other.  They are all made to measure, but one size will not fit all purposes.  We will make quicker progress when we accept this, and start paying more attention to what those purposes are, and how to ensure all this information is turned into action.

Jon Hall

Human Development Report Office, UNDP

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