THE NOBEL-prize winning economist Joseph Stiglitz warns that the gap between statistics and actual experience of people in their daily lives threatens the very safety of democracy.
Stiglitz, who last year handed in a report recommending new ways of documenting economic and social wellbeing to President Nicolas Sarkozy, says continuous references to statistics that do not resemble people’s daily lives will eventually create such a level of disbelief and distrust that it could threaten not only governments, but also modern democratic governance.
One year since his report, France’s national statistics group Insee has taken up many of Stiglitz’s recommendations and this month will release its first publication, France, Portrait Social, placing them altogether.
A replacement for GDP was initially a high priority for Sarkozy. Months after he launched the green summit, the Grenelle de l’environnement, he asked Stiglitz (a former adviser to Bill Clinton and former head of the World Bank) to produce a report on new ways to analyse the quality of life in France.
Sarkozy has said he wants to “escape the religion of figures” and even wrote the foreword to Stiglitz’s book Mismeasuring Our Lives: Why GDP Doesn’ t Add Up. On receiving the report in September last year, the president said it was time to put the wellbeing of the population above that of gross national product.
Stiglitz has long been critical of the focus on GDP. (Even one of the founders of GDP, Simon Kuznets, was aware of its limits: “The welfare of a nation can scarcely be inferred from a measure of national income,” he told the US Senate in 1934, as the government adopted the measure. It was taken up by other countries after the Second World War.)
The chief criticism of GDP is that it takes no account of environmental factors: chopping up an entire forest and selling it off as furniture is good for GDP.
Beyond that, the economist has likened the focus on GDP to that of a motorist driving a car while only looking at a speedometer, not the road or fuel gauge.
Among the recommendations in Stiglitz’s report are that a country should measure its performance in terms of the value of the environment, the distribution of wealth, the availability of disposable income and the impact and quality of services provided by the state, such as health and education.
Insee, along with the Observation and Statistics department, has agreed several new measurements to look at life in France.
In France, Portrait Social, Insee says it will create a measure of wellbeing and apply it to areas such as debt, work life, security, cost of living, health and education, to form a picture of how different people feel about these areas.
One new measurement, the revenue monetaire, adjusts the income of a household (its own GDP) against public spending on health and education that benefits them. The result is particularly beneficial to France when compared to other countries in Europe. On household income, the country lags behind Germany, Ireland, Italy and the UK. However, when the state investment in these households is taken into consideration France jumps to the top of the list, on a par with the UK. Insee will also look at the way such health and education spending affects the redistribution of wealth, the quality of life and equality of households.
France will also change the way it measures CO2, switching from the quantity of gas produced to the CO2 footprint of goods consumed in France. The shift means that the country will take into account the worldwide emissions caused by the goods it imports. The result is that the average carbon footprint of French residents rises from 6.7 tonnes a year to nine tonnes.
During 2011 the department wants to create a “water footprint” to monitor the consumption of water in the same way as C02 production, and to map the scale of biodiversity in different areas of France to inform planning decisions. Insee also wants better measurements on household savings and spending power when comparing rural and urban areas.
Measurements do not create a better country: they set goals and priorities. Sarkozy has been pushing other leaders to accept that, at 70 years old, GDP is ready to retire. Could France become a world leader in promoting wellbeing above all else?