Roundtable on the Measurement and Use of Data on Social Progress and People’s Well-Being
Remarks by Angel Gurría, OECD Secretary-General
Brdo, Slovenia, 29 November 2010
President Türk, Minister Svetlik, Ms. Krizman,
Ladies and Gentlemen,
I am very pleased to be in Brdo today to open the Roundtable on the Measurement and Use of Data on Social Progress and People’s Well-Being.
About a year ago, at the 3rd OECD World Forum in Busan, President Türk stressed that “the search of better, more comprehensive and more convincing ways of measuring progress is a vitally important task of our era”. This event marks an important step in this direction in Slovenia.
We are gathering today at a time when the pace of global economic recovery is still slow. Public debt in many countries is set to reach all-time highs, and unemployment remains at unacceptable levels. This is what official statistics are telling us. Beyond the numbers, there are people who have lost their jobs, their homes, their pensions. The crisis has undermined their confidence and it is our duty to rebuild it.
From GDP to well-being : an evident need
Restoring confidence requires evidence of real improvement in people’s everyday lives. But, why is it that even before the economic crisis, people felt that they were increasingly worse-off despite a steady rise of GDP per capita? Why is it that people in high-income countries rarely report higher levels of life satisfaction than people in lower income countries? Of the myriad of economic statistics at our disposal, how many warned of the economic crisis?
Could it be that our measuring tools need to be retuned?
Today we have top-notch indicators, but some of them are not looking at what truly matters. We put too much emphasis on measuring what we produce, principally through gross domestic product (GDP), and not enough on assessing our well-being and progress. Too many important policy decisions are taken with GDP as the main measurement rod.
GDP takes no account of the productive activity which occurs at home. It ignores leisure. It reflects the production of market goods, but not the environmental damage it may cause. It does not show how resilient and supportive our communities are, nor measure the living standards of households.
We need new indicators that measure what we value as a society. We need to raise living standards, confidence, not just GDP.
In doing this, we can build on a rich body of work. More than ten years ago, the OECD report on The Well-Being of Nations showed the importance of human and social capital for economic growth and overall well-being. Since then, the OECD produced new data and indicators in emerging fields -- such as innovation, educational outcomes, health, environment, climate change -- in order to inform policy decisions.
This has led to a broader reflection on the dimensions and the measures of societal progress. Since the first OECD World Forum held in Palermo in 2004, we have engaged with policy makers, statisticians, scientists, economic and social actors from more than 130 countries. They met again in Istanbul in 2007, in Busan in 2009, where President Türk delivered a keynote speech. And they will re-convene in New Delhi, India, in October 2012. Five years on from the first Forum, this initiative gave rise to a truly global movement aiming to provide new and more comprehensive indicators of societal progress.
New ways of measuring progress: momentum for change
Initiatives now range in scale and purpose, from community-based projects to the high-level Commission on the Measurement of Economic Performance and Social Progress, established by the French President Nicolas Sarcozy and led by Nobel-prize winners Joseph Stiglitz and Amartya Sen.
At the OECD, we supported this initiative and contributed the analysis of our conceptual and analytical work, carried out by during the last ten years. The report, released by the Commission in 2009, calls for a shift in the paradigm of progress: from production to well-being.
The idea of measuring progress has now made it to the top political spheres. Leaders have taken a strong and active interest in new measures of the well-being of their citizens. Among them are president Sarkozy of France, Chancellor Merkel of Germany, president Lee of Korea, prime minister Cameron of the UK and of course president Türk of Slovenia.
The political momentum for change is also building at a global level. At their Pittsburgh Summit, G20 leaders called for an improvement in measurement methods “to better take into account the social and environmental dimensions of economic development”. We should also note the European Commission work within the Beyond GDP initiative and the EU 2020 Agenda.
The OECD is part of this global wave of change.
The OECD work on innovative measures: towards a paradigm shift
In response to the call of OECD Ministers at their last meeting in May 2010, the OECD is stepping up its work on measuring progress of societies. But what does this mean concretely? Let me give a few examples of substantive measurement work that the OECD is currently undertaking.
Our first effort is directed at better measuring households’ material well-being. What happens at the level of the entire economy does not necessarily tell us what happens to households’ spending power. For example, over the last decade or so, real GDP in Italy grew by about 1.6% per year, whereas the real income of Italian households only rose by half that amount. Such a discrepancy can be observed in many other countries and we are now working in order to measure it and understand why.
Standard numbers do not account for the many important services that households produce at home. These include, for example, child care, cooking, care for the elderly, volunteer activities. Such activities could add between 20% and 40% to the present measure of GDP. Taking into account such measures would give a very different picture of performance across countries.
Most people would agree that there is more to life than money, but it is unlikely they would agree on how to define quality of life. Indicators of quality of life should reflect many aspects of people’s lives. These include, for example health conditions; the time spent commuting; the conditions of housing and the local environment; political participation and social connections; and the various risks that shape their feeling of security. Importantly, for each of these dimensions, we are trying to capture various forms of inequality in the population.
But can current well-being be sustained over time? This is another theme of our work, which attempts to develop better metrics on how our production and consumption patterns impact on the environment. Such green indicators will support the design of sustainable policies, as part of the OECD Green Growth Strategy, to be released next year. Taking a broader perspective, this work will also encompass measures of human and social capital, knowledge and innovation that need to be built and sustained across generations.
This rich new dataset on the various dimensions of well-being and progress will be brought to the attention of OECD Ministers at their 2011 Council Meeting.
Ultimately, this is all about improving lives
Let me leave you with this key message: measuring progress is not an end in itself. It is a means to improve policies that affect the well-being of people.
Think for instance how the indicators gathered by the International Panel on Climate Change raised awareness and contributed to the process on climate change policies. We will step up our work to ensure that the new progress indicators inform better policies across various policy domains. And we are also convinced that they will highlight and bring new issues to the attention of political leaders.
Innovative measures can also provide a new perspective on the necessary focus of policy action. Take the case of subjective measures of well-being. Research in this field supports much of our intuition as to what matters, i.e. health, income, being unemployed, lack of social contact. It also suggests that people perceive the participation in the democratic processes and the lack of corruption to be as important as education. The OECD is now working on guidelines on internationally comparable subjective well-being indicators.
The agenda of measuring well-being and progress will also contribute to the efforts for achieving the Millennium Development Goals. To this end, in collaboration with other international organisations, the OECD will develop a continuum of indicators that can be adapted to different development patterns.
Ladies and Gentlemen,
The process launched by the OECD in 2004, the recommendations of the Stiglitz-Sen Commission and the call of G20 leaders are opening an ambitious agenda. We are ready to continue to provide leadership and deliver on the mandates we received.
As we begin the celebration of the 50th anniversary of the OECD next month, we reaffirm our commitment to help countries design “better policies for better lives”. Better and new data on well-being and progress are essential parts of this agenda.
Let me conclude by thanking President Türk and Minister Svetlik for their support. Of course my warm thanks also go to Ms. Krizman and the Statistical Office of Slovenia for hosting this Roundtable.
We look forward to working with you to achieve progress and improve well-being for all.