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Economists want to measure citizens’ happiness

Published on 15/09/2009
Paris — Welcoming a report that he commissioned from a panel including Nobel Prize winning economists Joseph Stiglitz and Amartya Sen, French President Nicolas Sarkozy said France would pioneer the new techniques and urge other countries to follow suit.
The experts’ report was released at a time when many world economies are beginning to emerge from recession, but unemployment is continuing to rise and consumer confidence is still too shaky to drive a string recovery.

"Across the whole world, citizens think that we’re lying to them, that the figures are false and, worse, that they’re being manipulated," Sarkozy warned, calling for a new measure for economic performance.

"France will fight for all international organisations to modify their statistical methods. France will urge its European partners to set an example and will therefore modify its own systems," he said.

In February 2008, Sarkozy asked Stiglitz — a former White House advisor and World Bank chief economist — and 21 other international experts to find new ways to measure growth taking into account social well-being.

"There’s no single number that can capture anything as complex as our society," Stiglitz told AFP in an interview to launch the report.

"So what we argue for is the need for an array of carefully-chosen numbers, with a better understanding of the role of each of those numbers."

Currently, growth is measured as a percentage increase or decrease in Gross Domestic Product (GDP), which is a measure of the value of goods and services generated in a country and has long been seen by many as a crude benchmark.
As an example of how GDP could be misleading as a quality of life index, the report said an increase in fuel consumption would boost growth figures even if it only reflected more unproductive traffic jams and pollution.

"GDP was originally created as a measure of economic activity, but has increasingly become used as a measure of societal well-being. It wasn’t designed for that and it doesn’t measure that," Stiglitz said.

The economist said that in the run up to last year’s credit crunch, many world policy makers had sought to follow the American growth model because it had produced impressive GDP increases for the United States.

"Even if the financial sector were working perfectly, the problem is that Americans’ wealth has been devastated, they’ve been very hard hit," he said.

"Most of Americans’ wealth is in their real estate, their house, and that’s been essentially eliminated for at least a substantial fraction of Americans."

If countries had focused instead on plans to increase the median income of households, they might have protected themselves better from the crisis and improved the general well-being of their populations, the report suggests.
One of the first experts to welcome the report was the secretary general of the Organisation of Economic Cooperation and Development, Angel Gurria, who said that his body was ready to help create a new array of indicators.

"Economic resources are not all that matter in people’s lives," he said.
"We need better measures of people’s expectations and levels of satisfaction, of how they spend their time… and we need to broaden the range of assets that we consider important to sustain our well-being."

The report recommends GDP growth be used simply to measure market activity and that new systems take into account environmental health, safety and education — what Bhutan already calls its "Gross National Happiness".
Dave Clark /AFP / Expatica