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Over the past 60 years, the most commonly used indicator of economic, sometimes national, performance is growth in the Gross Domestic Product (GDP), measured in both absolute and per-capita terms. Unfortunately, GDP does not measure other elements which are important in daily lives such as leisure, culture, happiness, security, environment and income distribution.
Some people may ask what is Gross Domestic Product (GDP) and how is it calculated? See the definition in the Glossary
Calculation of GDP
Source: www.moneychimp.com (labels added by MindTools.net http://www.mindtools.net/GlobCourse/formula.shtml)
Organisations all over the globe are developing measures of a society’s progress (or sustainability, well-being or quality of life – all terms closely linked to progress). Work is being done at the sub-national, national, and international levels, undertaken by the public and private sectors, civil society, academia, and the media, sometimes in collaboration, both in developed and in developing countries.
The Knowledge Base contains hundreds of documents on measures of progress (or sustainability, wellbeing or quality of life - all terms closely linked to progress), where the selection of items are made by country or topic.
Globalisation is making the measurement and assessment of a country’s overall progress an issue requiring statistical and analytical approaches that go beyond national borders.
Beyond GDP: Initiatives around the World
For a long time, increasing concerns have been raised about the adequacy of current measures of economic performance, in particular those based on GDP figures. Moreover, there are broader concerns about the relevance of these figures as measures of societal well-being, as well as measures of economic, environmental, and social sustainability.
Several initiatives have been proposed and are developing to find new measures of progress and well-being of the societies.
Beyond GDP - International Conference and Initiative (November 2007) was organised by the European Commission, European Parliament, Club of Rome, OECD and WWF to explore how to improve the measurement of progress, true wealth and the well-being of nations.
Economic indicators such as GDP (Gross Domestic Product) were never designed to be comprehensive measures of well-being even though, GDP is often used as a generic indicator of progress. Adequate indicators, more inclusive of other dimensions of progress – in particular environmental and social aspects, are needed to address global challenges such as climate change, poverty, resource depletion and health. Summary notes from the Beyond GDP conference
Commission on the Measurement of Economic Performance and Social Progress has been created at the beginning of 2008 on French government's initiative. Its aim is to identify the limits of GDP as an indicator of economic performance and social progress.
Some additional information and important works:
Millennium Declaration
At the international level, the Millennium Declaration approved in 2000 by the General Assembly of the United Nations paved the way to the monitoring of the Millennium Development Goals (MDGs) through a set of indicators. After the initial enthusiasm, this process has shown some weaknesses: for example, in several countries (developed and developing), data used to calculate indicators are not derived from national statistics, but are estimated by international organisations; emerging countries often prefer to compare themselves with richer countries rendering the MDGs less relevant for them; and many countries do not use MDG indicators for national policy purposes. At the same time, the MDG framework has proven to be an effective tool to mobilise governments and others to concentrate financial resources on some common objectives.
Working together
International networks and governing bodies of international organisations have developed a plethora of indicators on almost all dimensions of society, resulting in a proliferation of publications and databases, sometimes providing different figures that purport to measure the same thing and creating a considerable burden for those already collecting data in some of the world’s poorest countries. Non Governmental Organisations have also developed their own indicator systems to monitor economic, social and environmental trends, and the implementation of commitments made by governments in summits. In some countries, civil society is taking the lead in calling for – even building – sets of progress measures, while governments are seeking new ways to collaborate with civil society to gain legitimacy for their role.
Read more about this ever growing Global Movement.
Approaches to measure societal progress
Many approaches are possible to measure societal progress, but they generally fall into three broad types:
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the extension of the basic national accounts schemes to cover social and environmental dimensions;
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the use of a wide range of indicators referring to economic, social and environmental dimensions (the use of composite indicators to summarise them in a single number is also possible);
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and the use of “subjective” measures of well-being, life-satisfaction or happiness.
Each approach has some strengths and weaknesses, but the most promising (and feasible in the medium term) approach seems the second one, with three important qualifications:
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work on extending the national accounts will continue and can be combined with other approaches;
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the integration of objective and subjective indicators is now considered more positively then some years ago, as the latter have demonstrated to provide important and additional information to evaluate several dimensions of well-being (health, relational goods, etc.);
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the selection of key indicators is a political process and needs to be carried out in a democratic way, i.e. with the involvement of all components of the society (government, opposition, trade unions, business associations, civil society, etc.), to provide a “bipartisan” legitimacy to the indicators set, a necessary condition to have it trusted by citizens and recognised as shared knowledge.
The development of any indicator set requires some framework to guide the process of indicator selection: this is necessarily a somewhat subjective process and an inherently political one. But statisticians have a key role to play alongside other actors. A key issue for policy making and democratic governance
For more information see:
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