Beyond GDP, but where to?

Transcription

1 Beyond GDP, but where to? Making sense of well-being and sustainability indicators Éloi LAURENT (OFCE/Sciences-po, Stanford University) Austrian Institute of Economic Research WIFO, Vienna, May

2 Outline Old questions; What do we want to measure? Economic well-being beyond GDP; Social progress beyond HDI; Territorial well-being; Decoupling or not? Capital in the 21 st century.

3 Old questions Issues of well-being and sustainability have been around for quite a long time in economic analysis, initially part of philosophy (later political science); Issues of well-being as old as Greek philosophy; Aristotle (4th BCE): Economics andethics (greatest possible good: happiness, but multiple definitions of happiness ) Bentham (1789): Utilitarianism founded on happiness ( it is the greatest happiness of the greatest number that is the measure of right and wrong );

4 Old questions Issues of sustainability as old as classical economics: the question of growth/development and physical limits of Nature; Physiocrats (mid-18 th century, Turgot, Quesnay); Malthus (1798); David Ricardo (1817); JS Mill (1848, steady-state);

5 Newer questions and answers Meadows Report (1972): Limits to growth ; Nordhaus/Tobin (1972): «Is growth obsolete?»; «Beyond GDP»: conference sponsored by the EU in 2007; Stiglitz-Sen-Fitoussi Commission (2009); Today: tens of indicators of well-being and sustainability

6 Well-being and sustainability Two distinct theoretical and empirical issues: well-being (or welfare) and sustainability; Well-being: What are the real drivers of human development/human flourishing beyond/beside income? ( static human welfare, multi-dimension approach to wellbeing, including environmental determinants); Sustainability: Can we project current well-being in time? (dynamic welfare under ecological constraints, measurement of different types of capital and modelling of their interaction);

7 Why not GDP? Objective and subjective well-being what really matters for people are more and more disconnected from GDP; Environmental sustainability is not at all accounted for by GDP; Un-measurability means invisibility, or, as the saying goes, what is not measured is not managed ; Measuring is governing: indicators determine policies and actions.

8 Measuring well-being Source: Laurent and Le Cacheux, 2015.

9 Measuring sustainability Source: Laurent and Le Cacheux, 2015.

10 The US recovery 100 Evolution in % GDP Corporate profits Stock market Median income -3 In the three years since 2009, 95% of income gains have been captured by the top 1% (which income grew by 31.4% while the bottom 99% income grew only by 0.4% from 2009 to2012). Source: NYT/Saez.

11 Income, GDP and elections GDP Obama approval on the economy GDP Median income Median income Source: OCDE, Sentier Research, Gallup.

12 Income and GDP in the US since 1967 Source: Measure of America.

13 GDP vs. income in the OECD 8 Annual (GDP income) in % points between 2007 and Source: OECD

14 Source: OECD Income policy in the OECD

15 Human development in retrospect World OECD Rest of the world Source: Prados de la Escosura, 2013.

16 Social progress beyond HDI

17 Social progress beyond HDI Voice and accountability for Tunisia, , , , ,45-0, ,66-0, , ,90-0,94-0,89-0, , ,32-1,29-1, Percentile rank among all countries (ranges from 0 (lowest) to 100 (highest) rank) Estimate of governance (ranges from approximately -2.5 (weak) to 2.5 (strong) governance performance) -1,37-1,00-1,20-1,40-1,60 Source: Governance Matters

18 Governance in China

19 Source: European Commission. Human development in the EU

20 Measuring well-being where it matters Paris region Vienna region Source: OECD.

21 Decoupling or not decoupling? Source: Wiedmann et al, PNAS, 2013.

22 Capital in the 21 st century Determinant cluster Natural capital Includes state variables related to. Environmental system, its ecology, climate, soils, biodiversity, minerals, etc. Manufactured capital Industrial system: factories, roads, cities, infrastructure Human capital Social capital Individuals: number/distribution, health, education, networks Arrangements (economic, political, cultural) governing interactions (rules, norms, trust) Knowledge capital Scientific findings, technology, practical skills and expertise Source: Bill Clark, 2013.

23 Genuine savings