Thursday, 25 October 2012

The Measurement Revolution - 4th OECD World Forum

Jonathan Tanner's picture
Every so often an idea comes along that will change the world.  Not instantly though. A historical glance shows how big ideas that have gone on to transform societies are not often born with a Eureka moment: paradigms usually shift slowly. When Michael Faraday discovered the electric current it took almost half a century for Swan and Edison to create the light-bulbs which showed the world in a new light and greatly increased the amount of potentially useful hours in a day.

It takes time for people to understand and explore the potential of new ways of doing and being. That’s what was happening at last week’s OECD World Forum. There is now a consensus (following on from the creation of the Human Development Index and the Sarkozy commission) among many of the world’s leading statisticians and economists that we have to have a radical rethink about how to assess a country’s performance.

Not only is there consensus, there’s action. A group of technocrats you would never expect to challenge orthodoxy are engaged in a deeply political act. Countries at all stages of development from Canada to Mexico and Bhutan are actively trying to measure wellbeing, going beyond GDP to measure other aspects of life that seem to matter to people. The UK has heralded the 'Happiness Index’ and spawned a number of other initiatives aimed at quantifying the feelgood factor such as the Happy Planet Index. The old adage that ‘there’s more to life than money’ seems to have got through – at least in these quarters.

The move to broaden definitions of national progress has its roots in the wide realisation that GDP, so long the gold standard measure of performance, is seriously flawed. In his keynote speech at the conference Nobel prize-winning economist Joseph Stiglitz outlined how the economic focus has blinded us to other factors that affect our lives such as equality and the environment. It’s good for showing us how busy an economy is, he said, but too easily skewed by leaky tax regimes such as that currently found in Ireland. Other ready examples can be found in states with high levels of oil wealth. Progress may appear on the national balance sheet, but it rarely materialises as much- needed cash for cash-strapped pockets.

So if we don’t just measure the money, what else should we measure? That was the main focus of the discussion in Delhi. Health and education outcomes were obvious candidates but there was also elbow room for the suggestion that issues such as housing, quality of life in old age, nutrition, discrimination and even power are all worthy areas to measure  in terms of improvements in the collective human condition.

At this point the conversation tended towards the technical. There’s a broad agreement that we should be using multi-dimensional measures. There’s also much thought being devoted to whether such multiple measures can be brought to heel in the form of one composite mega-measure. It’s something the Oxford Poverty and Human Development Initiative are looking to achieve.  Development Progress’s latest paper outlines a multi-dimensional dashboard approach to measurement of wellbeing and highlights some of the unexpected and encouraging results a broader look at the performance of African countries in the past decade can bring.

There remain good reasons not to get carried away just yet. Princeton Professor Angus Deaton contributed a reality check when he revealed evidence to suggest that money does make us happy after all, showing that, when taking a different look at the latest available data (admittedly from 2005), there was a clear correlation between higher income and higher assessments of happiness. It was left to Professor Deaton to make explicit too that happiness and wellbeing are highly subjective concepts. Whilst the utility and reliability of such emerging data can be called into question, it will remain a challenge to convince policy-makers to start applying any new findings to national decision-making.

In an interview shortly after his keynote speech Joseph Stiglitz was asked to explain why measuring wellbeing matters so much. ‘It’s quite simple,’ he said. ‘If we measure the wrong things, we do the wrong things.’ To capture a snapshot of people’s contentment with their lot in life will not prove an easy challenge, but on the evidence of the past week the crusading number-crunchers look set to rise to that challenge. One day we may well be thankful to them.

Jonathan Tanner
Development Progress

Development Progress interviewed a number of delegates at the 4th OECD World Forum in Delhi, including Joseph Stiglitz and Jeffrey Sachs, to get their views on the conference and wider issues involved in debates about the measurement of well-being.

This blog first appeared on 24 October 2012 on the Development Progress site and can be found here

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